Equity Bank has lost a bid to reverse a court order to pay a customer Sh450,000 in compensation for money lost following a drugging incident.
High Court Judge Julius Ng'arng'ar upheld the order issued by a magistrate court in Kerugoya in September 2022, stating that the bank was liable for negligence by delaying the investigation of the matter, where the victim lost over Sh600,000.
The bank had appealed the lower court's judgement. It argued that the customer was responsible for his own loss and the lender could not be blamed.
Justice Ng’arng’ar, however, dismissed the appeal and backed the order requiring the bank to pay the customer a sum of Sh450,726 as damages for negligence.
The court found that the bank acted negligently in investigating the customer’s case upon notification about the loss of the ATM card since the probe started nine months after the report was made.
"This court wholly agrees with that finding. The bank gave no explanation why a delay of almost nine months took place in conducting its own internal investigations. And when it so did, the outcome left a lot to be desired. I therefore find that indeed the bank was negligent to this extent and the customer was entitled to damages," Justice Ng'arng'ar said in a June 7, 2025 decision.
The customer, Mr Peterson Kagai, was an account holder at Equity Bank Mwea branch and was robbed of his wallet, which had the ATM card, on February 25, 2019. At the time his bank account had a balance of Sh604,478.
The court heard that Mr Kagai lost the card at Kenol Makutano area, Mwea, after being hugged by a woman.
He fell dizzy and unconscious. Upon regaining responsiveness, he realised that he had lost Sh15,500 in cash, two mobile phones, and his equity ATM card.
He would later discover that his bank account had been wiped clean during that intervening period.
He reported this incident at Embu Police Station three days later on February 28 and further at the bank's Embu branch and later at Mwea Branch, where his account was domiciled.
He stated that upon reporting he was issued with a bank statement disclosing that his account had a balance of Sh72.
A total of 13 illegal transactions ranging from withdrawals of Sh10,000 had taken place on February 26 leading to loss of the money.
CCTV footage revealed an unknown lady withdrawing Sh30,000 at the bank’s ATM branch in Kenol Makutano using Mr Kagai's ATM card.
He maintained that he had never disclosed his PIN to anyone at that time. He visited the bank with police and the institution was advised to investigate the matter as it was discovered that after that ATM withdrawal, all funds were channeled from his account via mobile banking, which he had never registered since opening his account.
His further investigations by a private financial expert Simon Maina CPA revealed that various sums were withdrawn from the account by three different people.
There were also withdrawals made through Eazzy Funds Transfer. There were also transfers to mobile phones.
In Mr Maina's opinion, since the frequency of the transactions was high, pertinently 13 transactions in one day, an alert ought to have been raised by the bank.
For its part, the bank called Mr Martin Kirimi, a security and investigation manager, who testified that the money was withdrawn through an ATM, while other transfers took place from the Eazzy App transfer and pesalink.
