Dubai Bank bosses charged with theft, money laundering

Dubai Bank Kenya’s Chief Executive Officer Binay Dutta was on Wednesday charged alongside other bank directors with stealing money and failing to comply with the anti-money laundering act.

Dutta, together with three other directors; Abdul Hafedh Zubedi, Ali Bashir Sheikh and Professor Wilson Hassan Nandwa are accused of stealing Sh12.6 million from the troubled bank.

The three are said to have set up and registered a shell company called Runway Entertainment limited where they stashed the stolen money.

The court has now issued an arrest warrant for Dutta, who is an Indian national said to have fled the country and failed to honour court summons.

Meanwhile, the other directors charged alongside Dutta did not take a plea following objections by their lawyers as the judge handling the case is on vacation.

The matter has now been deferred to 21st December when the chief magistrate court will be sitting.

The Central Bank of Kenya had placed Dubai Bank under receivership on the 14th of August this year after it emerged that the small-sized commercial bank had been violating CBK rules and banking laws, including meeting set daily cash reserve ratios.

Dubai Bank was also found to be unable to meet its cash obligations, which included Sh48.18 million owed to Bank of Africa Kenya Limited.

This comes barely two weeks after Central Bank of Kenya announced that it is considering harsher penalties for commercial banks that flout operational rules and may soon publicize enforcement actions that it will take against errant banks.

According to CBK Governor Dr Patrick Njoroge, the review of the penalties will be a part of the bank’s plan to strengthen supervision of lenders.

The Central Bank may consider publishing details of penalties against banks that violate laws, only after the fact, in order to avoid a run on any institution facing regulatory actions.

The harsher penalties follow fraudulent withdrawals and other illegal transactions at Imperial Bank that amounted to more than Sh34 billion over a period of 13 years.

This led CBK’s to order the privately-owned Imperial Bank to be put under management after the board alerted it to malpractices at the mid-sized lender.

More than 20 companies and a number of individuals were linked to the fraudulent activities that began in 2002.