Businessman and media owner Samuel Kamau Macharia (SK Macharia) has been ordered to return Sh400 million withdrawn from Directline Assurance Company Limited.
Judge Alfred Mapia said the transfer of funds by Mr Macharia was not only unlawful and illegal, but was intended to financially cripple the company.
The judge said the money should be returned to the bank account from which it was withdrawn.
The judge said: “This is in order to achieve the goals of justice and secure the interest of the plaintiff’s policyholders and those seeking compensation.”
Judge Mapia also ordered a forensic audit of the insurance company’s books of accounts, a process that must be carried out by an interim board within 90 days from the date of the ruling.
The judge said that the interim joint council to be formed will consist of two nominees each from AKM Investments Ltd, Janus Ltd and Royal Media Services Ltd.
“In light of the above, I am satisfied that the plaintiff has not only established a prima facie case, but has demonstrated that unless the defendants’ actions are reversed and restrained as required, the plaintiff will suffer irreparable loss and damage,” the judge said.
The problems at the insurance company began when Mr Macharia wrote to the bank to transfer Sh400 million from an account belonging to Directline Assurance Company Ltd to a housing company he owns.
The millions were to be transferred to an account under Toy and Suna Holdings, a company owned by Mr Macharia, to finance the development of kiosks and low-cost housing at Toy Market in Nairobi.
Mrs Terry Wanjiku Wijingi rushed to court claiming that she is a director, founder and shareholder of the company.
It said that although it had approval from the Insurance Regulatory Authority (IRA) to act as director and principal officer, its employment was terminated on August 30, 2019, with the signature of Mr Macharia.
The court later overturned the termination in a ruling issued on February 27, 2020, she said.
Ms Wijenje confirmed that she owned a 20 percent stake in Janus Limited and that she was the majority shareholder and that the dispute in the company arose after the death of John Geshia, Mr Macharia’s son.
It said Mr Macharia, his wife and Royal Credit Limited own 9.664 per cent of the shares while AKM Investments Limited, Janus Limited, Sure Invest Company Limited, Stenny Investment Pty Limited and Triad Networks Limited collectively own 90.336 per cent of the company’s shares.
It said Macharia’s takeover of the company included irregular appointments of additional directors, which contravenes the Companies Act.
Ms Wijenje sought orders restraining Mr Macharia and his agents from making any withdrawals, transfers or other transactions that could affect the smooth running of the company.
It asked the court to block the withdrawal of funds from DTB, stock and family banks.
The director said that the dispute over the ownership of the company was referred to arbitration and resulted in a ruling published on June 22, 2022, and the request to recognize and implement this ruling, as well as its cancellation, is still pending before the Supreme Court. .
The court was told that at the time of the award, the minority shareholders had engaged in illegal actions, including terminating its employment, appointing new executives and key employees, and removing and appointing new directors.
These actions were allegedly reported to the Registrar of Companies, who deemed the decisions of 18 and 19 March 2020 illegal and invalid.
Mr. Atanas Maina opposed the application saying he was appointed secretary of the insurance company and was working with a board of directors that had been duly appointed by a majority of shareholders and approved by the IRA.
He said that he performed his role as company secretary in the best interest of Directline.
The same was supported by Mr. Julius Orenge who said that Ms. Wijenje is not a founder, shareholder or director of the company.
Mr Orengi said the actual founders were Royal Credit Limited, Mr Macharia, Ms Purity Kamau Macharia and Dan Karobia.
For its part, the IRA confirmed that it could not approve any directors because ownership of the company’s shares was in dispute.
Mr. Macharia and his agents asserted that the IRA aimed to mislead the court by ignoring an audit of stock ownership in the company.
Furthermore, they alleged that both parties had ignored the findings of the audit which allegedly revealed that AKM Investment Limited had grossly mismanaged the company by misappropriating nearly Sh7 billion.
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