Crowe Horwath, an auditing firm, through its local partners Horwath Erustus and Company, told Parliament that Dubai Bank collapsed under the weight of a Sh4 billion loan book, out of which Sh2.5 billion was non-performing, at the end of December 2014. The auditing firm also revealed that six individuals and their companies were behind last year’s sudden collapse of Dubai Bank. It reported this after inspecting the lender’s books in the past decade..
A search at the Registrar of Companies revealed that Dubai Bank’s heavy borrowers’ list is made up of politically connected businessmen such as former Nakuru stalwart Geoffrey Asanyo, Cyrus Jirongo and Benson Ndeta.
Celphas Osoro, the external auditor in charge of Dubai bank at the time of its collapse in August last year, told the National Assembly’s Finance, Planning and Trade Committee that Sh1.9 billion of the non-performing loans had been disbursed to 10 companies, some of which had common shareholding.
“If you are to lift the corporate veil, you will find that five or six persons had been lent Sh1.9 billion that were non-performing. This represented 76 per cent of the non-performing loans,” Mr Osoro told the committee chaired by Ainamoi MP Benjamin Lang’at.
The committee is investigating the circumstances that led to the collapse of Dubai Bank and two other lenders, Imperial and Chase banks, in a period of nine months.
Mr Osoro told MPs that most of the individuals behind the six companies at Dubai Bank were politically exposed persons, one of whom had loans amounting to Sh890 million or 88 per cent of lenders core capital.
The list of “politically exposed persons” and companies with non-performing loans at Dubai Bank includes Zap Group (Sh889 million), Kwanza Estates (Sh412 million), Sololo Outlets (Sh103.2 million), Kuza Farms and Allied (Sh249 million) and Torino Enterprises Limited (Sh138.9 million).
He added that known individuals were responsible for more than Sh1 billion of the bank’s non-performing loans portfolio, indicating that Dubai Bank’s business model was imprudent.
“If you have a core capital of Sh1 billion and two people get loans of Sh1.4 billion, then you are doing very bad business. The two people were just customers and not shareholders of the bank,” he said.
Mr Osoro, however, refused to disclose the names of the people behind the six companies after his lawyers advised him against the move.
Kitutu Masaba MP Timothy Bosire demanded that the auditors reveal the “politically related persons” behind the companies and insisted that Sololo Outlets is associated with Mr Jirongo.
Crowe Horwath’s legal team cited Article 118 of the Constitution that confers upon a committee of the House certain powers, including receiving certain privileged information in camera.
The committee said that Crowe Horwath’s reluctance to name directors of the companies meant that those involved are untouchables. “We need to unmask those who are fleecing poor Kenyans of their hard-earned wealth,” said committee vice-chairman Nelson Gachuhie.
“If the information is given in the presence of the media, it might prejudice other people who can appear before this committee. It is important to note that the borrowers were companies and not individuals,” said Crowe Horwath.
