Trader in Sh24 Ecobank CRB listing row loses suit

Eco Bank

Eco Bank branch in Thika town.

Photo credit: File | Nation Media Group

A businessman whose company was listed in the Credit Reference Bureau (CBR) as a defaulter over a debt of Sh24 has lost the bid to have Ecobank pay him damages for alleged defamation.

Charles Gitundu Mwangi’s Rural Technology Enterprises Ltd was listed on the CRB in December 2013 after he failed to persuade the High Court that the information provided by Ecobank to CRB was defamatory and caused his firm substantial losses.

He testified that the false information relayed by the lender to CRB was calculated to depict Rural Technology as lacking in financial integrity, incapable of meeting its financial obligations and not credit-worthy.

Justice Maureen Odero, however, faulted him for opening the corporate account and leaving it dormant for three years, attracting bank charges.

The judge said the bank was fully entitled to debit the company’s account with the usual bank charges and in the event that the account went into debit, then the bank was entitled to charge interest at the normal bank rates.

“I find that although it may have been petty for the bank to forward the company’s name to CRB for a debt of only Sh24, it was certainly not illegal or unprocedural for the lender to do so,” observed Justice Odero.

Loan facility

The judge noted that the fact Rural Technology did not take out a loan facility with the bank “is neither here nor there.

“The account was in debit and no matter how small the amount, the money was owed to the bank.”

How did the company incur Sh24 debt? Evidence presented in court shows that Mr Gitundu, the firm’s managing director, opened the account in 2010 and deposited Sh3,000 and a cheque of Sh10,000. He then went quiet with the account until the company’s name was listed on the CRB in December 2013

Mr Gitundu argued that he never borrowed a loan or credit facility from the bank and indicated it was wrong for them to forward information about the company to CRB on alleged default.

But justice Odero had a different view on the matter. She said that given the very minute the debt was incurred, the bank ought to have contacted the company to settle the peanuts.

On the other hand, the judge said Mr Gitundu equally had a duty to check on the status of the company’s account and make good any arrears due to the bank.

“To open an account and just abandon it is not good business practice,” observed justice Odero.

The businessman claimed that Ecobank informed CRB that the company had defaulted in repayment of a loan facility advanced to it and owed the lender Sh24.

Credit facility

He complained that the company was never officially notified about the debt by the bank nor was he granted an opportunity to pay it.

He maintained that the company never borrowed a loan or advanced any credit facility by the bank.

Mr Gitundu further argued that in view of the fact that the company’s account was not operational (dormant), no bank charges ought to have been levied against the account.

“In any case, the account was in credit when I opened it and the statements issued by the bank show that no withdrawals were made. In fact, the lender was the sole beneficiary of the company’s money by charging maintenance fees,” he stated.

He told the court that the report lodged by the Ecobank with CRB made Co-operative Bank reject his application for an overdraft facility, a move that occasioned huge losses to the company.

Ecobank Relationship Officer Maweu Syovo opposed the suit saying the account was in debit due to banking charges which had remained unpaid. The witness said the bank had an obligation to refer names of defaulters to CRB.

Dismissing the case, Justice Odero said Mr Gitundu never called an accountant to testify on behalf of Rural Technology or even attach audited accounts to prove the firm’s financial losses.