Stanbic, airline row over Sh722 million now at Court of Appeal

The Sh722 million battle pitting an airline against Stanbic Bank has landed before the Court of Appeal.

Court of Appeal Judges Mumbi Ngugi, Pauline Nyamweya and Weldon Korir froze the hearing of a case filed by Air Afrik Aviation Limited before the High Court, opening a new battlefront between the firm and the bank.

“That there shall be stay of further proceedings in Nairobi HC. COMM Case No. 413 of 2018 pending the ruling of this court,” the bench headed by Justice Ngugi ruled.

Stanbic moved to the Court of Appeal, arguing that a High Court ruling had made it impossible tell its side of the story.

The lender’s lawyer Kamau Karori, said the orders by Justice Nixon Sifuna meant that it had to get the approval of Air Afrik to file its witness statement. Karori said this was unheard of.

On the other hand, Air Afrik argued that the bank intended to delay the case by filing an appeal. According to the firm, the High Court had already heard at least five witnesses.

Air Afrik alleged that Stanbic had not adduced evidence to show that it would be prejudiced by the orders issued in the lower court.

This comes as Stanbic decried harassment by South Sudan authorities over the same dispute.
The bank said it had received summons from the South Sudan Prosecution attorney, which it claimed was a similar intimidatory tactic employed by the Kenyan counterparts.

“Similar intimidatory tactics have been employed by the counterparties in Kenya and the High Court has issued conservatory orders against the DCI and DPP stopping further harassment and intimidation of the Bank and its officers pending the determination of a constitutional petition filed by the Bank to halt this abuse of process by the DCI and DPP,” the bank said.

Stanbic and its CEO Joshua Oigara got orders stopping either arrests or harassment from the Kenyan authorities, after arguing that the summons were based on a false complaint.

In the case, the bank and Oigara said that DCI’s Banking Investigative Fraud Unit (BIFU) summoned the CEO to appear on a day he was with President William Ruto at the Kenyatta International Conference Center (KICC) for Inua Biashara MSME Exhibition.

However, High Court Judge Bahati Mwamuye heard that the investigators sent Oigara fresh summons requiring him to go to the Kiambu Road based headquarters to write a statement regarding an eight years dispute between the lender and its customer.

Kamau said that the DCI alleged that it is investigating alleged fraudulent false accounting.

The senior lawyer said that the investigative agency is probing a false complaint which had already been previously investigated and the bank cleared.

Karori asserted that Air Afrik had filed a complaint with the Central Bank of Kenya over the same issue. He said, the regulator threw it out after finding that the bank had done nothing wrong by debiting amounts it had erroneously wired to the firm.

At the same time, he argued that Air Afrik filed a separate case before commercial court Prof. Sifuna.

Kamau argued that Oigara was not working with Stanbic at the time the transaction was alleged to have happened.

The lawyer said that the DCI is being used to cripple the bank’s ability to battle Air Afrik in the commercial case.

According to Stanbic’s legal officer Janet Wanjohi, the row stemmed from a transaction in 2016.

Wanjohi explained that Air Afrik was Stanbic’s  customer and operated a business account in Juba, South Sudan in its  South Sudan branch.

She narrated that on February 5, 2016, Stanbic received a credit advice note from the Bank of South Sudan (BoSS) advising that its clearing and settlement account had been credited with USD 7.2 million for Air Afrik.

The officer said that three days later,Stanbic credited the aviation company’s account with the money after deducting its commission.

Subsequently, Wanjohi said, Air Afrik withdrew at least Sh101 million from the account.
However, she explained that Stanbic realised that BoSS had not actually remitted the money it had instructed it to wire to Air Afrik.

The court heard that lender opted to freeze any further withdrawals and notified the aviation company that the money in the account would be reversed.

In response, Air Afrik asked the court to dismiss the case. It argued that the issues raised ought to have been dealt with by the investigative agencies.