West Kenya Sugar Chairman Jaswant Singh Rai.

West Kenya Sugar Chairman Jaswant Singh Rai.

| File | Nation media Group

Court freezes Rai family account at Absa in row

The High Court has frozen a bank account under the Rai family’s estate following an inheritance fight that has entangled Absa Bank.

Justice Alfred Mabeya issued the freeze orders on Rai Investments Ltd’s Absa account after Iqbal Rai, Jaswant’s brother and rival in their father’s succession battle, claimed to have been illegally removed as a signatory.

In court papers, Iqbal claims that one of his brothers colluded with Absa to remove him as a signatory despite the lack of a board resolution.

While he does not mention which of his brothers is behind the signatory changes, Iqbal and Jaswant are on opposite sides of the fence in a case seeking to resolve the distribution of the wealth left behind by the family patriarch—Tarlochan Singh Rai—who died in 2010.

Brothers Jasbir and Iqbal are challenging Jaswant’s push to get the court’s permission to administer the multibillion-shilling estate with businesses in East Africa, Malawi, India and the United Kingdom.

Aside from reinstatement as a signatory, Iqbal wants Absa compelled to furnish him with certified bank statements relating to Rai Investment’s account from March. He also wants an order directing Absa to give him monetary compensation for the alleged irregular removal as an account signatory.

“The said removal renders the account susceptible to manipulation and withdrawals without the consent of the applicant who is still a director/shareholder,” Iqbal says in court papers.

He adds: “The Companies Act ... require decisions of the company to be made vide resolutions and in this case, the removal of the plaintiff from the company mandate has never been discussed in a meeting of the shareholders/directors of the company and it must be concluded by any independent umpire, therefore, that the conduct of the defendant is unlawful.”

Iqbal insists that records at the Business Registration Service indicate that he is still a director and shareholder of Rai Investments and that he would have knowledge of the firm’s board resolution to oust him.

The dispute could spell more trouble for Absa as Iqbal has written to the Directorate of Criminal Investigations (DCI) and the Central Bank of Kenya (CBK) in relation to the alleged change of signatories.

The DCI’s Banking Fraud Investigation Unit and the CBK were copied in two demand letters that Iqbal’s lawyers sent to Absa in April.

In the letters also filed in court, Iqbal said that neither Absa nor Rai Investments furnished him with a board of directors resolution authorising changes to the signatories list. He further accused Absa of colluding with another signatory to the account in the removal.

In the suit against Absa, Iqbal says that in February, he requested statements detailing transactions in Rai Investments Ltd’s account but the lender declined on the grounds that he is no longer a signatory.

Lawyers Ekuru Aukot and Alvin Kosgei last week told Justice Mabeya that their client, Iqbal, is willing to drop the case if he is reinstated as a signatory to the bank account.

Dr Aukot and Mr Kosgei said that Iqbal’s removal as a signatory without a board resolution indicates that Absa may have weak controls that cast doubt on the safety of money that Rai Investments has saved in the bank.

Iqbal says in court papers that he asked Absa to furnish him with a board of directors resolution removing him as an account signatory but he is yet to receive it.

He adds that in March, Absa’s head of corporate and investment banking, James Agin promised to look into the matter. Later that month, relationship manager Joseph Kanyua called Iqbal and told him that he was not entitled to any information as his signatory rights had been revoked.

Iqbal adds that in April, then Absa acting CEO Yusuf Omari called him and informed him that he had been removed as a signatory during a know-your-client exercise.

“I told him that his explanation could not suffice as I had, in my personal capacity, been the defendant’s (Absa) client for over four decades. I take the view that the actions of the defendant are unlawful and fraudulent as to the best of my knowledge, no company resolution has been passed by the Board of Directors of Rai Investments Ltd to remove me from the bank mandate,” Iqbal says in an affidavit.

Iqbal also accused Absa of failing to investigate his removal as a signatory and treating his follow-ups with contempt.

The Rai family has had a long-standing relationship with Absa. The family patriarch, Tarlochan, also held a bank account at Absa that records in the succession case show may have had Sh349 million in 2010.

Tarlochan founded Rai Investments in 1978, and listed his three sons—Jaswant, Iqbal and Sarbjit—as directors. All three sons were signatories to the firm’s Absa bank account.

The patriarch’s death triggered a vicious battle for control of his vast estate. The court battle promises to offer Kenyans a peek into the wealth of the Rais, their financial dealings and the infighting that threatens to tear the family apart.

The family is believed to have had close ties with the ruling elite in the Moi, Kibaki and Kenyatta administrations.

They have interests in cement production (Rai Cement), edible oils and soaps (Menengai Oil Refineries), sawmilling (Timsales, RaiPly and Webuye Panpaper), wheat farming, horticulture, sugar milling (West Kenya, which owns Kabras Sugar) and real estate (Tulip Properties).

In 2020, the family acquired Dominion Farms in Siaya County’s Yala Swamp after its American owner pulled out under controversial circumstances.

Iqbal and Sarbjit are taking on Jaswant as they challenge a Will allegedly written by their father in 1999. Their mother, Sarjij, was on the same side as Iqbal and Sarbjit before her death in 2021.

The Absa bank account freeze order marks another blow for Jaswant after his mysterious daylight abduction on August 28 that lasted three days and a stinging rebuke from President William Ruto over his fight for control of Mumias Sugar Company.

Mumias Sugar became a new battleground for the feuding brothers after Jaswant joined other bidders to try and wrest a lucrative leasing contract from his younger sibling Sarbi Singh Rai.

Sarbi, through his Uganda-based Sarrai Group, had won the 20-year lease to run Mumias Sugar.

The fight for the miller threatened to derail its revival, inviting the wrath of President Ruto, which forced Jaswant to withdraw from the suit.