Equity Bank manager testifies in loan dispute case
What you need to know:
- The case, being heard by Judge Prof. Agatho Ubena at the High Court’s Commercial Division in Dar es Salaam, was initiated by Kahama Oil Mills Limited and Kahama Import & Export Commercial Agency Limited, which claim to have borrowed funds from these banks.
Dar es Salaam. The second defense witness in the complex loan dispute between Kahama Oil Mills Limited and others against Equity Bank Tanzania Limited (EBT) and Equity Bank Kenya Limited (EBK) has identified the actual borrowers involved in the case.
Timothy Mwatha, the General Manager of Loans at EBK, detailed the loan disbursement process and its transfer from lenders to borrowers.
He provided this testimony on Monday, July 30, 2024, from noon until 7 p.m., under the guidance of defense lawyer Zaharani Sinare, and was cross-examined by the plaintiffs' lawyer, Frank Mwalongo. Mwatha also presented various documents, which the court accepted as evidence.
The case, being heard by Judge Prof. Agatho Ubena at the High Court’s Commercial Division in Dar es Salaam, was initiated by Kahama Oil Mills Limited and Kahama Import & Export Commercial Agency Limited, which claim to have borrowed funds from these banks.
Other plaintiffs 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, a director of these companies.
This case is part of several lawsuits filed against these banks by various companies alleging that they were lent billions and then had disputes over repayment. The companies initiated the case after receiving demands from the banks for repayment of $46.6 million, equivalent to more than Sh122.54 billion.
According to court records, the companies claim they never received a $32 million loan from the defendants (the banks), alleging instead that the loan was given to Kom Group of Companies in Nairobi, Kenya.
They further claim they received a $30 million loan from Kom Group of Companies Limited, which is not involved in this case, and have already begun repaying part of it.
In response, the banks filed counterclaims, asserting that they provided the loan which has not been repaid, and disputing the existence of a company named Kom Group of Companies Limited in Nairobi, Kenya, which the companies claim received the loan.
The banks state that the current debt amounts to $47.2 million (over Sh123 billion), including the principal loan amount of $32 million, interest, and penalties.
In his testimony, Mwatha affirmed that the borrowers in this case are Kahama Oil Mills Limited and Kahama Import & Export Commercial Agency Limited, not Kom Group of Companies in Nairobi as claimed by the plaintiffs.
He explained that Kom Group of Companies Limited (recognized with EBK, Nairobi, Kenya) is an internal loan account name created by EBK to facilitate the loan disbursement.
To manage the loan disbursement and repayment, EBK opened two accounts: one internal loan account named Kom Group of Companies Limited with its address (EBK) in Nairobi, Kenya, and another Escrow account named Kahama Oil Mills Limited - Escrow account, also with EBK, to facilitate the transfer of the loan to the first borrower’s account, Kahama Oil Mills.
According to Mwatha, these accounts were used to facilitate the $26,592,232.00 loan disbursed by EBK to the borrower’s account.
He also submitted various documents related to the loan disbursement process, which were accepted by the court as evidence. These documents included financial statements of the bank accounts used for the loan disbursement, intended to show the flow of funds from lenders to borrowers.
During cross-examination, Mwatha clarified that the loan from EBK was deposited into an internal EBK account named Kom Group of Companies Limited before being transferred to an Escrow account named Kahama Oil Mills Limited. He confirmed that both accounts were used to manage the loan disbursement and repayment.
Mwatha concluded his testimony after Defense Attorney Sinare informed the court that there were no further questions due to his responses to the cross-examination questions posed by Lawyer Mwalongo.
Following Mwatha’s testimony, Attorney Sinare notified the court that another witness would be called to continue providing evidence. Judge Ubena adjourned the case until August 21, 2024, when it will resume with the defense's evidence.
