Equity Bank commences complex loan evidence disbursement to Kahama Oil Mills
Dar es Salaam. Equity Tanzania Limited (EBT) and Equity Kenya Limited (EBK) have begun presenting evidence in another dispute involving a $32 million loan repayment.
The case was filed in the High Court Commercial Division by Kahama Oil Mills Limited and Kahama Import & Export Commercial Agency Limited, alleged borrowers from the banks.
Other claimants in case number 78 of 2023 include loan guarantors: Kom Group of Companies Limited, Shinyanga Royal Pharmacy (2015) Limited, Royal Supermarket (2008) Limited, and Mhoja Nkwabi Kabalo, the director of these companies.
The case is part of several lawsuits against the banks and companies that claim to have been loaned billions, with counterclaims stating they did not receive loans from the banks or have already repaid them.
The companies filed the case after receiving demand letters from the banks for $46,658,395.81 ( equivalent to over Sh122.54 billion).
This amount includes the principal loan of $32 million (over Sh84 billion) which the banks assert they loaned to the companies, along with interest.
The case, presided over by Judge Professor Agatho Ubena, is currently in the defense stage. The defense is presenting evidence after the plaintiffs concluded their testimony denying the loans or debts owed to the banks.
Represented by lawyer Zharani Sinare, the banks are presenting witnesses to refute claims that they did not provide the loans and to substantiate their counterclaims that they did, and have not been repaid.
However, the first defense witness, Equity Bank Kenya officer Michael Kessy from the credit department, stated he did not participate in the loan issuance or management processes as he was not employed by the banks at that time.
Kessy provided this information on July 22, 2024, during cross-examination by plaintiffs' lawyer Frank Mwalongo, regarding his previously submitted written evidence and various documents as exhibits.
Part of the cross examination between lawyer Mwalongo and the witness unfolded as follows:
Lawyer: Exhibit P3F (plaintiffs' Exhibit 3F, bank account statement), explain to the court the $26,592,232 credited to the first defendant's (Kahama Oil Mills) account is from whom?
Witness: Your Honor, the details here indicate Kom Group of Companies Limited- Escrow account.
Lawyer: The $4.2 million stated on this bank statement, where does it indicate it came from?
Witness: It's stated as Kom Group Companies Limited.
Lawyer: Do you have any other statement showing $26 million and $4 million, indicating these funds came from the second defendant, Equity Bank Kenya Limited (EBK)?
Witness: No, this is the statement showing the received funds.
Lawyer: In your capacity as an EBK employee, were you unaware of what was happening?
Witness: That's not true.
Lawyer: When the money was sent from Kom Group of Companies within EBK, you did not participate in sending that money, correct?
Witness: That's correct.
Lawyer: Did you not open the accounts used to send money in this transaction in Kenya?
Witness: It's true I didn't participate personally because I was not yet employed.
Lawyer: According to the counterclaims, you were not involved in issuing and managing those loans?
Witness: That's not true.
Lawyer: Kessy, you did not participate in transferring money from EBK to Kom Group of Companies, correct?
Witness: That's correct, Your Honor.
Lawyer: You also did not participate in transferring money from Kom Group of Companies to the first defendant?
Witness: That's correct, personally I did not participate as I was not yet employed.
Lawyer: Even today, in your current position, you cannot access the system to view those transactions from EBK to Kom Group of Companies and from Kom Group of Companies to the first defendant (Kahama Oil Mills)?
Witness: Yes.
Lawyer: Regarding the claim that the money came from EBK (to the first and second defendants), what evidence do you have to support that, or is it your assumption?
Witness: There are other documents showing that.
Following the cross examination, the case has been adjourned until Thursday, July 25, 2024, when the witness will continue to be questioned, before other defense witnesses are called.
In the case, the companies, while acknowledging they entered into loan agreements totaling $32 million signed by both parties on May 28, 2018, and June 19, 2020, dispute receiving the loans from the banks.
Instead, they claim the banks disbursed $32 million to Kom Group of Companies in Nairobi, Kenya, and they received a loan totaling $30 million from Kom Group of Companies in Nairobi, Kenya, not from the banks.
They also claim to have partially repaid the loan to that company, citing payment confirmation documents as evidence.
Therefore, they request the Court to declare that the banking loan agreement signed on May 28, 2018, and June 19, 2020, was not implemented and that the banks breached the loan agreement by failing to provide them with the loan.
They also ask the Court to declare that the banks have no claims against them and that the loan securities held by the banks are unlawful, ordering the banks to release those securities and return ownership documents for those securities.
They further request the Court to order the banks to reimburse the first defendant with $1.3 million paid by EBK to Nisk Capital Limited, contrary to the agreement between the first and second defendants, for which an invoice was submitted to the first defendant.
The claimants also request the Court to order the banks to pay them interest, compensation for total loss, and case expenses.
However, the banks have filed counterclaims against the claimants, denying claims of breach of banking loan terms by failing to execute them and alleging they disbursed the $32 million loan to Kom Group of Companies Limited in Nairobi, Kenya, not to the claimants.
The banks demand proof of these claims and the existence of Kom Group of Companies Limited in Nairobi, Kenya, to which EBK allegedly provided a $32 million loan.
Instead, the banks claim to have disbursed the $32 million loan to the first and second defendants.
The banks have provided a breakdown of the loan disbursement in different phases, showing dates and amounts credited to accounts claimed to belong to the defendants.
They claim to have fulfilled their contractual obligations as agreed but accuse the borrowers of breaching the loan agreement terms.
They claim that by July 26, 2023, the principal debt had reached $47,228,592.53 (Sh124 billion), with interest continuing to accrue at the agreed rate until all payments are completed.
Therefore, they claim they are entitled to hold all securities deposited as collateral for the loan.
Thus, they also request the Court to dismiss the claimant's suit and order that the first and second defendants (borrowers) have breached the terms and conditions of the loan agreement signed by both parties on May 28, 2028.
They also request the Court to declare that the third, fourth, fifth, and sixth defendants (guarantors) are liable for the defendants.
They also request a Court order for the borrowers and guarantors, collectively and individually, to pay a total of $47,228,592.53 (Sh 124 billion).
