Ratio Magazine :: The Inside Track to East Africa’s Economies - Kenya: Kenya Commercial Banks Blocks Triton and Fortis Property Sale

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Kenya: Kenya Commercial Banks Blocks Triton and Fortis Property Sale

Wednesday, 04 March 2009

Kenya Commercial Bank (KCB) is pursing an aggressive strategy through the courts to minimise the damage from its exposure to the Triton oil fraud, now blocking the sale of Triton properties to Fortis Bank after taking the Kenya Pipeline Company to court. By Albert Muriuki.

Lady Justice Jesse Lessit has granted orders to restrain Triton Bulk Storage Co. Ltd and Fortis Bank of Netherlands from disposing, interfering with or otherwise dealing with the three prime parcels of land in Mombasa. In a bid to raise money just days before he left the country, Yagnesh Devani, the fugitive Chief Executive Officer of Triton Petroleum Co (K) Ltd (in receivership), tried to sell prime properties of land in Mombasa to Fortis Bank. According to court papers, the three plots where secured by two major regional banks, Kenya Commercial Bank (KCB) and the Eastern and Southern African Trade and Development Bank (PTA Bank). Had he succeeded, KCB and PTA Bank would have lost close to KES170m. According to KCB, the main reason why they had to go to court and stop the sale was because damages cannot adequately compensate them if they win the case since the financial prospects of Triton were not certain in the foreseeable future.

According to court papers, after Triton having been placed under receivership, it emerged that around March 2008 Triton had purportedly transferred a piece of prime property, L.R.No MN/VI/3845, to Fortis Bank for an alleged payment of KES75.1m. “The aforesaid charge was ostensibly created to secure advances and or financial accommodation made to Triton Energy Limited by Fortis Bank,” state KCB in court papers. Triton Energy Limited is one of the companies associated with Yagnesh Devani. It had been named as a beneficiary of the property.

Under the terms of the debentures given to KCB and PTA by Triton, Triton was expressly prohibited from transferring or disposing of or alienating any part of its properties and assets that were charged except by way of sale in the ordinary course of business and upon the terms that the proceeds of such sales would be paid into Triton’s accounts with KCB and PTA. According to the two banks, their approval was not sought for the transfer of L.R.No MN/VI/3845, resulting in a breach of the terms of the debenture.

On 25 February 2009, the Commercial Courts allowed the banks to continue with the application and serve Devani through the Daily Nation newspaper. Lawyer Paul Ogunde of Walker Kontos & Company Advocates told Ratio Magazine that he will be going back to court on 10 March 2009, and if no one represents Fortis, judgment will be given against them at their cost.

Triton was placed under receivership by KCB and PTA Bank on the 19 of December 2008 after the company failed to meet its obligation to make repayment under the financial facilities that were extended to it by the two. KCB has also taken the Kenya Pipeline Company (KPC) to court for releasing Triton products financed by KCB without authorisation, and are trying to recover KES1bn Kenya Commercial Bank Takes Pipeline Company to Court over Triton Scam. Despite the substantial flaws in Kenya’s legal system, KCB are clearly making aggressive use of the courts to minimise the damage from its exposure to the Triton fraud. As the only financier who has gone to court to safeguard its interest in the Triton case, KCB will expect to be treated preferentially over other creditors.

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