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Tea factory blocked from joining Citibank Sh261m loan probe case
The High Court has rejected an application by Kiru Tea Factory Company to join a case in which Citibank N.A. Kenya is seeking to stop a criminal investigation over a disputed $2.02 million (Sh261 million) loan.
The High Court in Nairobi has rejected an application by Kiru Tea Factory Company Ltd to join a case in which Citibank N.A. Kenya is seeking to stop a criminal investigation over a disputed $2.02 million (Sh261 million) loan.
The court ruled that the farmers-owned company, managed by the Kenya Tea Development Agency (KTDA), had not shown that excluding it from the case would affect its interests or that it had information the State investigators could not present. The factory is based in Murang’a County.
“I am not persuaded that there is anything that the applicant (Kiru) will present that cannot already be provided by the respondents nor that it will be prejudiced if the Petition is heard in its absence,” the judge said.
The case concerns a $2.02 million facility the bank advanced to Kiru in March 2021, with the Directorate of Criminal Investigation (DCI) examining how the loan was approved, disbursed and moved.
The court issued interim orders on June 15 barring investigators from questioning the bank’s CEO Martin Mugambi and investigating the facility.
Kiru sought to enter the case after learning that the orders had halted an investigation arising from its complaint. It argued that it was directly affected as the complainant.
In its July 13 application, Kiru asked to be joined as an interested party and allowed to respond to Citibank’s petition. It said its complaint concerned alleged unauthorised borrowing and repayment from factory funds.
Its chairman, Geoffrey Chege Kirundi, said the company’s board had never authorised, applied for, or approved the facility. He said the factory commissioned audits before lodging a criminal complaint with the DCI.
“The active police inquiry is not a routine civil debt collection matter,” Mr Kirundi said, describing it as an investigation into how the funds were obtained.
Kiru claimed that the facility was neither received nor used by the company, while its coffers repaid the loan and interest.
The company argued that the investigation affected more than 8,000 smallholder tea growers who own the factory.
Kiru also argued that the June 15 orders should be set aside so that the police investigation could continue. Its formal prayers, however, were for joinder and permission to respond.
Citibank opposed the application through Mr Mugambi, saying the petition did not seek any order against Kiru and challenged whether investigators had exercised their powers lawfully.
Mr Mugambi said the credit facilities were advanced within an ordinary bank-client relationship and governed by contractual terms. He argued that Kiru had not shown an identifiable stake.
He also said that adding Kiru to the petition would introduce “collateral disputes and allegations” that could distract the court from Citibank’s constitutional questions.
In its ruling, the court stated that Kiru had to show a clear interest, possible prejudice from exclusion, and submissions distinct from existing parties.
The court found that though Kiru’s complaint triggered the investigation, this did not require participation.
“It is trite law that the proper complainant in criminal proceedings is the Republic,” the court said, adding that a reporting party is ordinarily a witness for the Republic.
The court found that the DCI and DPP could adequately represent the investigative position and that Kiru had not shown they were unable or unwilling to perform their duties.
“I am not persuaded that the applicant would present a perspective on the said issues that is distinct from that likely to be proffered by the Respondents,” the court said, dismissing Kiru’s application.
The DCI investigation remains contested by Citibank. The bank says investigators are turning a commercial lending decision into a criminal matter and questions the alleged offence of “negligently accepting a credit application”.
Citibank, N.A. Kenya is a branch of Citibank, N.A., a federally chartered National Banking Association, organised and existing under the laws of the United States of America.
The bank said the DCI summons contained "vague, unparticularised allegations" and sought to investigate an alleged offence of "negligently accepting a credit application", which it argued is unknown to the criminal law.
Separately, the DCI obtained magistrate’s court warrants seeking Citibank account records, statements, RTGS instructions and board documents relating to the facility and transfers between March and December 2021. The court is due to hear Citibank’s application on September 17.
