An Italian firm at the centre of the multi-billion shillings dams’ scandal is in more trouble for failing to repay close to Sh600 million bank loan.
Justice Francis Tuiyott has granted orders stopping CMC Di Ravenna from transferring, selling or disposing its assets until a suit by Barclays Bank of Kenya seeking to recover the loan is determined.
Justice Tuiyott also ordered CMC Di Ravenna to surrender all the 98 vehicles and equipment it had already purchased for the construction of Arror and Kimwarer multi-purpose dams in Elgeyo Marakwet County for safe custody.
“The court issues an order directing the company to forthwith deliver all motor vehicles and equipment listed in the asset finance agreement with Barclays Bank to Casuarina Ltd for purposes of preservation pending determination of the dispute,” ruled Tuiyott.
The judge’s order spelt more doom for construction of the Arror and Kimwarer dams.
There is already controversy surrounding construction of the two dams, with the Director of Criminal Investigations leading the hunt for individuals suspected of misappropriating Sh21 billion meant for the projects.
Barclays Bank, through Iseme, Kamau and Maema (IKM) Advocates, argued that it fears the company is about to go under before repaying Sh595,655,552 it borrowed to finance the purchase of the equipment.
Lawyer Kamau Karoli submitted that the company has already filed an insolvency case in Italy and that unless the court allows the bank to preserve the equipment, it will lose a substantial amount of money.
“Their insolvency case was admitted by the court in Italy which shows they are not in a position to settle the debt owed to the bank. They are likely to proceed and dispose off their assets without repaying the loan if let to go,” said Karoli.
In her affidavit, the bank’s head of business, Anne Mbatha, swore that the company operated accounts with the bank and in April 2017 applied for a loan to purchase vehicles and other equipment.
She stated that on May 23, 2017, they executed an asset finance agreement through which the company agreed to transfer ownership of the equipment to the bank until the loan is fully repaid.
“The agreement was that there will be joint ownership of the vehicles and equipment and that the bank may take possession if the company fails to honour the agreement on repayment,” said Mbatha.
She stated that the company has failed to pay loan installments as agreed and that the bank stands to suffer losses of the principal amount and interest which continues to grow at 6.5 per cent per year.
She added that despite extending time for the company to repay the loan, it has continued to default.
“Given that they have filed the insolvency case in Italy, they are likely to remove the vehicles and the equipment to settle other third parties without regard to the loan advanced to them,” said Mbatha.
Justice Tuiyott scheduled the hearing for Wednesday.