How Imperial Bank fall smoked late tycoon’s family out of reclusive zone

Before then, the family of deceased tycoon Azizali Haiderali Jessa who founded the firm lived a life of opulence.

Nearly every week between 2002 and 2015, at least 13 companies under the W.E. Tilley group would receive between Sh10 million and Sh100 million from a mysterious Imperial Bank account.

Benefitted

The Jessa patriarch died in August 2005, which indicates that he may have also benefitted from the looting of Imperial Bank.

On paper, W.E. Tilley companies exported fish worth billions of shillings every year. Short of its entanglement in the 2006 closure of Charterhouse Bank, there was not much to say about them.

Despite declaring losses in some years, the firms were doing fine and its owners were living an enviable and luxurious, but reclusive life.

But since Imperial Bank’s collapse, which revealed that the W.E. Tilley companies received more than 75 per cent of the Sh44.9 billion stolen from the lender, the Jessa family has not had it smooth.

The latest onslaught has come from Prime Bank, which has asked the court to allow it to recover a Sh296.1 million loan owed by two companies under the W.E. Tilley group and, which was guaranteed by Zulfikar Haiderali Jessa and Nasir Jessa.

Sued

Prime Bank has sued W.E. Tilley (Muthaiga) Ltd, the cornerstone of the Jessa family business empire, and Hands of Green Investments Ltd alongside their directors Zulfikar and Nasir Jessa.

The lender says that in 2012 the Jessa family wanted to purchase all shares in Value Pak Foods and a 93 per cent in Hands of Green Investments Ltd. Zulfikar and Nasir Jessa approached Prime Bank for a loan.

Prime Bank advanced them Sh257.6 million for the share purchase deals.

The loan was to be repaid by Value Pak Foods and was secured by three pieces of land in Ruiru owned by the firm.

Zulfikar and Nasir Jessa signed personal guarantees for the debt as directors of W.E. Tilley (Muthaiga) Ltd.

The takeovers sailed through smoothly, but that was as good as it got for the Jessa family’s investment in the two vehicles.

An insolvency petition was filed against Value Pak Foods in 2014 for failure to pay debts. In 2016, a year after Imperial Bank’s collapse, the firm was declared insolvent while still owing Prime Bank money.

Depositors’ money

Value Pak is among the 12 companies that Imperial Bank’s receiver-manager sued in 2015 seeking to recover Sh34.4 billion stolen from depositors.

The firm was sued alongside other Jessa family businesses — W.E. Tilley (Muthaiga), Primecatch (Exports), Mara Fish Packers, J Fish Kenya, Victorian Delight, Ruby Red, From Eden, Aqualite, Marmo E Granito Mines, Marmo Marble (U) and Fishways Uganda.

Imperial Bank’s receiver manager, the Kenya Deposit Insurance Corporation (KDIC) obtained court orders freezing bank accounts and other assets owned by the Jessa family and their companies, including the three pieces of land owned by Value Pak Foods.

One year after Imperial Bank’s collapse, Value Pak Foods was declared insolvent by the High Court. However, its liquidation will prove a tough task as its assets are frozen on account of the Imperial Bank cases.

Prime Bank has now sued the Jessa family and their two firms from the 2012 share purchase deal-seeking reprieve.

“In the premises, the borrower (Value Pak Foods) is indebted to the plaintiff (Prime Bank) in the manner and to the extent pleaded herein and the defendants are liable to the plaintiff to the same extent pursuant to and in accordance with the respective deeds of guarantee pleaded hereinabove,” Prime Bank’s lawyers Mutua Waweru & Company Advocates argue.

In liquidation

But the Jessa family says Value Pak is now in liquidation and that the law must be followed in selling the collapsed company’s assets to pay creditors.

Zulfikar and Nasir Jessa insist that they will appeal the liquidation order against Value Pak, but that their relationship with the collapsed firm ended when the courts ordered that it be wound up.

“The defendants further aver that their deed of guarantee was extinguished the moment the borrower was put into liquidation. The defendants aver that the plaintiff should indeed have applied to be enjoined in the High Court winding-up case wherein they should have lodged their claim, as a secured creditor, but not in the instant proceedings,” the Jessa family argues through Kamau Kaka & Company Advocates.

The Jessa kin in 2017 lost their bid to stop the auction of assets worth millions of shillings by their Kisumu landlord after W.E. Tilley (Muthaiga) failed to pay rent arrears.

Victoria Distributors sold computers, CCTV cameras, freezers, diesel pumps, gas cylinders, a water treatment plant, transformers, generators, and other equipment to recover the money.

On paper, the Jessa companies were successful enterprises making significant contributions to the economies of Kenya, Uganda, and Tanzania for several years.

The group’s cornerstone firm, W.E. Tilley Muthaiga, for instance, declared the sale of fish worth Sh1.3 billion between October 2005 and June 2006.

Corporations that rake in such huge profits from one product or industry often go into folklore detailing how to climb the ladder of success and stay atop it.

Public scrutiny

But the Jessa family and its companies did not once fish for any form of publicity. When the Central Bank of Kenya (CBK) shut down Charterhouse Bank in June 2006 the Jessa family and their businesses were for the first time thrust into public scrutiny. Investigations by the National Assembly led by vocal legislator Billow Kerrow had revealed that W.E. Tilley and its subsidiaries were part of a network of corporations that were using the lender to launder money while evading taxes.

At least Sh64.2 billion in dirty money had been hidden and laundered through Charterhouse Bank before being released to its beneficiaries such as the W.E. Tilley group.

Interestingly, at the time money laundering was not a crime in Kenya hence the Jessa family and other companies that were mentioned in the same light had done no wrong.

But the Charterhouse Bank debacle did inspire legislators to criminalise money laundering three years later, as President Kibaki enacted the Proceeds of Crime and Money Laundering Act. Despite the public uproar from discoveries made in the Charterhouse investigations, the Jessa family and their companies faded back into oblivion for another nine years when another dirty lender bit the dust.

When the CBK shut Imperial Bank, it revealed through American audit firm FTI Consulting that the Jessa family and their companies were at the forefront of dirty dealings in the lender. At least 13 companies under the W.E. Tilley group had been beneficiaries or getaway vehicles for Sh34 billion looted from Imperial Bank depositors. Only one of the Jessa companies that had accounts at Imperial Bank, SI Square, was not sued in by the KDIC.

Sh44.9 billion looted

FTI Consulting discovered that Sh44.9 billion was looted from Imperial Bank clients between 2002 and 2015, meaning the Jessa family is responsible for more than 75 per cent of the depositors’ pain.

Three insiders –Abdulmalek Janmohammed (CEO),Naeem Shah (managing director), and James Kaburu (deputy managing director) – were crucial to the siphoning scheme that once again thrust the W.E. Tilley group into publicity. Mr Janmohammed was in control of an account named Hanscombe Management Ltd, which was used to send money to the W.E. Tilley group of companies.

Records from the Companies’ registry indicate that Hanscombe was wound up in 2002, a sign that Janmohammed and his cohorts may have planned to blame a dead company if their scam was unearthed.

Money stolen from depositors was wired into the Hanscombe account.

W.E. Tilley would inform Janmohammed how much money would be required for a particular week. Janmohammed would then pass handwritten chits to Mr Shah detailing how much money to move from the Hanscombe account into W.E. Tilley group.

In total, the Jessa family operated 73 bank accounts at Imperial Bank. It would transfer money received from Hanscombe to their other accounts at Fidelity Commercial Bank (now SBM) and Diamond Trust Bank.

W.E. Tilley (Muthaiga) had 46 bank accounts at Imperial Bank which received Sh33.2 billion between 2002 and 2015.

Value Pak Foods had six accounts, while From Eden maintained four.

Primecatch (Exports), Marmo E Granito, and Mara Fish Packers each had three accounts. Prime Catch received Sh822 million, while Mara Fish Packers got Sh380 million. Ruby Red, Marmo Marble (U), and Fishways (U) had two accounts each.

Zulfikar Jessa and the estate of Azizali Haiderali Jessa had one account each at the collapsed lender. The money stolen from Imperial Bank would be listed as loans.

There was, however, no documentation to support the loans. After the KDIC took over Imperial Bank, W.E. Tilley wrote a letter to the CBK stating that it had received Sh10 billion from the collapsed lender and was willing to refund the money.

But the Jessa family later claimed in court that Imperial Bank’s Board tricked them into authoring the letter which was meant to give comfort to the CBK and avoid receivership.

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