BOT organ ordered to pay Coast Textiles Limited Sh146bn

Monday May 23 2022
DIB pic

There’s now evidence to show that the FBME Bank was insolvent . PHOTO | GETTY IMAGES

By The Citizen Reporter

Dar es Salaam. The High Court in Dar es Salaam has ordered the Director of Deposit Insurance Board (DIB), Mr Isack Kihwili, to pay Sh145.9 billion to Coast Textiles Limited in execution of court decree issued seven years ago against FBME Bank Limited.

Judge Amir Mruma gave the order last Friday against the DIB Director who was appointed by the Bank of Tanzania (BoT) as Liquidator of FBME Bank, after granting an application for execution filed by CoastTextiles Limited, the applicant.

“The applicant has the right to execute the decree of the court. I grant the application and order the Liquidator of FBME Bank to satisfy the decree,” the judge declared.

In his an affidavit to show cause, seeking dismissal of the application, the respondent had stated that since the FBME Bank Limited was being wound up, any execution or attachment cannot be put in force against its assets ,as such move would be inconceivable and against the law.

However, in his ruling the judge pointed out that there was no material evidence presented to show that the FBME Bank was insolvent and there was no where shown that such commercial institution was not capable of paying debts to its creditors.

The judge noted further that there were no reasons provided by the liquidator to show why the bank in question was being wound up and thereafter placed under liquidation and that his operating licence was revoked.

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It was further noted that the FBME Bank was placed under liquidation on May 8, 2017 at a time when the Court had already delivered the judgment on the matter in favour of Coast Textile Limited.

Referring to Article 107A (1) of the Constitution of the United Republic of Tanzania, the judge pointed out that the Judiciary shall be the authority with final decision in dispensation of justice in the United Republic of Tanzania.

“Therefore, the Court decree is final, thus cannot be subjected to scrutiny or ranking by the liquidator. I decline to make a finding that the applicant cannot execute the court decree,” the judge ruled.

The company filed the application for execution, requesting the sum of Sh145,946,500,641 be realised from the DIB, the liquidators of FBME Bank, default of which the Director of Board be held accountable.

Coast Textiles Limited, a local company, decided to seek the court intervention after failure by FBME Bank, whose operations were taken over by the BoT, to implement the judgment given by Judge Aloysius Mujulizi in 2015 on such payments.

Records show that the local company has been in court corridors since 1997, which is 24 years, pursuing her rights against the FBME Bank Limited, which was later taken over by the BoT having being implicated with money laundering crimes to protect Tanzanians customers.

Coast Textiles Limited was at all material times a customer of FBME Bank Limited since 1997 and had been granted an overdraft facility by Trust Bank, through its branch in Kenya. But the amount involved, which is about $600,000, was not credited to Coast Textiles Limited suppliers in India.

A dispute arose relating to repayment of the overdraft, leading Delphis Bank, the predecessors of FBME Bank Limited to consolidate two credit facilities.

Coast Textiles Limited claimed that the concentration of the two credit facilities granted by the bank was wrong and in breach of the agreement.

By deed of transfer from Delphis Bank (T) Limited, predecessor in title of FBME Bank Limited dated June 28, 2001, the latter bank’s interest in Coast Textiles Limited were transferred to Loan and Advances Realization Trust, the predecessor in title to Consolidated Holding Corporation.

Consequently, the Consolidated Holding Corporation, exercising powers granted to it under the law, transferred the landed property, including plant and machinery as mortgaged by debenture in favour of FBME Bank which latter fraudulently sold the property to Middle East Properties Limited.

The said Middle East Properties subsequently transferred the property on Plot No. 3 LOT 20, Nyerere (Pugu) Road to Empire Properties Limited and subsequent to Five Star Investments Limited. The transfer happened while the matter was in court.

On December 31, 2015, the court issued a garnishee order directing the Governor of BoT to attach accounts belonging to FBME Bank Limited in execution of the decree issued by High Court Judge Aloysius Mujulizi for the payments in question, which include principal sum and interests.

Following that garnishee order, the BoT filed an application for investigation into legal ownership and, or status of the fund held in bank accounts and eventually lift and set aside the order. In its ruling, the court agreed to lift the garnishee order, but could not exonerate the BoT to satisfy the decree.