Interesting development has, once again, roped in the former Barclays Bank of Kenya (and now Absa bank) in a thick corner.
The institution which has been one of the banks losing money in e-commerce fraud – due to potential collusion from staff with rogue third parties has a serious case to answer.
Sh1.5 billion
Already, the High Court in Mombasa has issued orders directing Absa Bank to pay a transport firm Ksh1.5 billion as compensation for allegedly leaking a client’s confidential information to third parties.
The order was issued by Mombasa Deputy Registrar Joshua Nyariki after Absa Bank failed to defend a case filed by New Mega Africa Ltd before the Commercial and Admiralty Court.
It is not clear why a bank of the stature of Absa will ignore defense in such a case that outrightly goes against the Banking and Data Protection laws.
“The defendant (Absa) in the suit having been duly served and having failed to file a defense within the stipulated period of time, and upon application of the plaintiff’s advocate, I enter interlocutory judgment as prayed,” he said.
The interlocutory judgment was delivered after the firm through lawyer Titus Kirui requested a final verdict of the suit on grounds that the bank had failed to enter its appearance despite having been served.
It is not clear why a bank of the stature of Absa will ignore defense in such a case that outrightly goes against the Banking and Data Protection laws.
New Mega
“New Mega Africa requests for judgment against the defendant who has entered appearance and has failed to file its defence within the stipulated 14 days despite being served with the summons. The request is for interlocutory judgment for Kshh1.5 billion together with interest at court rates until payment in full,” Kirui said.
It then that Absa Kenya appointed Iseme, Kamau & Maema advocates to represent it. Absa has since prayed to the Court to stay execution of the decree.
New Mega Africa lawyer Kirui further informed the court that his client had already written and served the bank with a letter on its next move to proceed with the execution of the interlocutory judgment.
Civil Procedure
“We have proceeded to file a bill of costs before proceeding with the executive orders, therefore, the purpose of this letter is to inform your firm of the judgment which has been rendered against you,” reads part of the letter.
Section 94 of the Civil Procedure Act requires that a decree can only be executed upon a party obtaining leave of the court in the event costs have not been ascertained.
The plaintiff claims that an employee of the Absa Bank leaked his information to third parties which had dire consequences on the plaintiff’s business operations.
A witness, Jared Makori has sworn under oath confirming that an Absa bank employee known to him and the director of the plaintiff had approached him with damning information confidential on the financial performance of New Mega Africa.
“As a result of the leakage, the plaintiff’s creditors and other suppliers descended upon him and interrupted the business operations,” Mr Kirui said.
He stated that his major business was in the transport sector and that defendant (Absa bank) had accorded him various financial facilities which were fully secured through a charge over the property.
Covid-19 pandemic
“However the plaintiff’s performance was doing well until the country began feeling the full effects of COVID-19 pandemic. As a result, the plaintiff’s business nose-dived as it had to ground some of its trucks, thereby defaulting on payment of the loan,” he stated.
He has further argued that the decision by an employee of Absa Bank to disclose confidential information to third parties without his consent infringed on his right to privacy and amounts to a breach of its common law of fiduciary duty.
The Board of Absa Bank Kenya appointed Yusuf Omari to take over as interim CEO & MD effective 1 November 2022. He replaced long-serving Jeremy Awori who was appointed the new CEO of Ecobank Group.
Absa Bank Kenya is a subsidiary of the South Africa based Absa Group.
Even as Absa Bank tries to wriggle itself out of its’ own mess, serious questions emerge;
(a) Why did Absa bank fail to heed the notice to be sued and or take decisive action on its’ own employee who was using confidential information to extort from third parties while irreparably damaging the good standing of New Mega Africa?
(b) How many other unsuspecting clients of Absa Bank could be victims of these unfortunate development?
(c) Why hasn’t the Central Bank of Kenya not penalized Absa Bank?
(d) Why does Absa Bank fail to empathize with and or support its’ own client who had provided sufficient securities?
(e) Why has the Office of the Data Protection Commissioner punished Absa Bank in line with the Data Protection Act?
(f) Why hasn’t Absa sought for an out of Court settlement as the probability of undoing the decree remains negligible?
(g) We hope Absa Bank will have no reason to block the likely application from Cofek seeking to enjoin the case as it raises serious constitutional matters especially as regards consumer protection and privacy matters