Firm sues Absa Kenya for Sh1.5billion in data row 

ABSA bank on Muindi Mbingu Street in Nairobi.

Photo credit: Lucy Wanjiru I Nation Media Group

A transport company has sued Absa Bank Kenya Plc over alleged disclosure of confidential information to third parties on account standing and wants a Sh1.5 billion compensation.

New Mega Africa Ltd has filed the case before Commercial and Admiralty division of the High Court in Mombasa alleging financial sabotage and sharing of client’s financial statements with strangers without consent.

The company transports clinkers from Kenya to Tororo in Uganda for the manufacture and processing of cement and other related products.

Once processed to finished products, the company would transport the same to various outlets within the East African region.

The company explains that because of the good relationship existing between it and the bank, the financial institution accorded it various financial facilities, which were fully secured through a charge over a property located in Kitisuru, Nairobi among other securities.

“The relationship was very well and as such, the business grew exponentially,” said the company through its director David Abai.

Due to its good business performance, court documents indicate the company’s main client added 11 trucks under an arrangement of lease to own.

All the payments were processed through the firm’s account held at the bank. 

By the time Covid-19 struck, the company says its facility with the bank had grown to Sh72 million, broken down under various heads such as term loan, invoice discounting, overdraft and bank guarantee.

But due to the covid-19 effects, the company said through Kirui Kamwibua & Company advocates that its main client varied its payment period from the initial seven days to 14 days to a period between 45 to 60 days.

Because of these changes, the firm alleges it sought for an additional facility of Sh5 million to cushion on fuel demands due to the increase in the payment period.

“Despite the bank, its employees or agents promising to assist the firm to cover up for the period increase, it failed to do so notwithstanding the securities it held over the firm,” said Mr Abai, adding that by the time the request was approved, the business had suffered and grounded.

He said that due to this failure, the business nosedived as he had to ground some of his trucks, thereby, defaulting on his obligations both to the main client and the bank.

He said that numerous letters to the bank requesting it to restructure the loan were met with long delays affecting the firm’s operations.

“In the meantime, one of the bank’s employees was leaking the firm’s confidential information to third parties, and that information had dire consequences on my business,” he said.

Mr Abai alleges that due to the leakage, the firm’s creditors and other suppliers descended upon it thereby seriously interrupting the business operations to an extent of almost grounding it.

He said due to the leakage, insurers cancelled his insurance policy, he suffered stalled operations, low business and harassment by auctioneers and financial turmoil.

According to the claimant, the bank’s actions amount to breach of its common law and fiduciary duties it owed the firm.

The firm now accuses the bank of failing to maintain secrecy of the client’s account, printing the client's financial statements without authority or consent and sharing the same with strangers without its express consent.

“I add that the bank’s failure to act on my requisition for over six months amounts to financial sabotage,” he said 

According to the claimant, the financial institution financially sabotaged him by failing to respond to emails and letters requesting for the facility structure and demanding for kickbacks and other incentives prior to approving or disbursing any loans.

Business operations

He also accuses the bank of failing to follow up undertakings that have a direct bearing on business operations, delay in taking action on urgent requisition and failing to take action upon lodging complaints of leakage of information.

Mr Abai , therefore, wants compensation of Sh192 million, Sh1.2 million and Sh92 million as loss of income , goodwill and  fixed assets.

“I have on numerous occasions followed up the matter with the bank with a view of resolving it but the defendant has been adamant to do so,” he said 

He alleged that his business took a turn for worse since August 2021, thus hampering its growth, which was at a steady rise at the time the bank started sabotaging it.

“Despite demand and notice of intention to sue having been made, the bank has refused and or neglected to settle the above claim or any part thereof necessitating the institution of this suit,” he said 

The bank has entered a memorandum of appearance through the firm of Iseme,Kamu & Maema advocates but has yet to respond to the suit.

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