BY SAM ALFAN.
Collapsed lender Charterhouse Bank now wants the law firm of Oraro & Company Advocates barred from representing Central Bank of Kenya (CBK) in a suit challenging the closure of the bank over two decades ago.
In an application certified as urgent by High Court Commercial division Judge Njoki Mwangi, the lender and directors Sanjay Shah and Manoj Shah claimed there existed a relationship between the law firm and the lender.
Through lawyer Martin Gitonga, Charterhouse Bank and the businessmen argue that the firm of Oraro & Company Advocates and Charterhouse Bank Limited had an advocate-client relationship for several years from 2007 to 2012.
“It is undoubtedly clear that the participation of the firm of Oraro and Company advocates in this matter as an advocate of the Charterhouse Bank ltd is likely to cause grave and irreparable harm and prejudice,” the application stated.
The lawyer said from June 2006, the firm of Oraro and Co advocates acted for the Bank as an advocate on matters touching on the statutory management of the lender, which forms a key component of the dispute before the court.
The judge directed the lender and its directors to serve the application to the CBK, Kenya Deposits Insurance Corporation, National Police Service, Directorate of Criminal Investigations and Attorney General.
The case will be mentioned before Justices Hedwig Ong’udi (presiding judge), Justice Thande and Enock Mwita on February 22, for direction and hearing.
“An injunction be and is hereby issued restraining the firm of Oraro & Company advocates practicing under the said firm from representing the Central Bank of Kenya,” seeks Charterhouse bank and two businessmen.
In the course of the said advocate client relationship/engagement, the firm of Oraro & Company Advocates was privy to confidential or privileged information pertaining to Charterhouse’s banking operations the subject of this suit.
They argue that on the same period from June 23, 2006 to date, the firm of Oraro & Company Advocates also acted for the bank on matters touching on the statutory management of the Bank.
The report was submitted on May 6, 2021 but the bank argues that it was made by a manager unknown in law, recommending liquidation of the Bank, and which Sanjay supposedly acted upon in appointing KDIC to liquidate Charterhouse Bank.
“It is indisputable that some of the key issues raised in the suit concern the validity or invalidity of the acts of the statutory manager of the bank by the CBK, which concern matters in which the firm of Oraro & Company Advocates acted for both the Bank and the CBK. This raises an issue of serious conflict of interest, which is likely to prejudice the Bank if the firm of Oraro & Company Advocates were allowed to continue acting for the CBK in this matter,” Lawyer Gitonga told the court.
He added that there is conflict of interest resulting in a real likelihood or possibility that the firm of Oraro & Company Advocates may consciously or unconsciously or even inadvertently use the confidential or privileged information obtained in the course of the advocate client-relationship with the Bank in favour of the CBK to the detriment and prejudice of the Bank.
“There is conflict of interest resulting in a real likelihood or possibility that the firm of Oraro & Company Advocates may consciously or unconsciously or even inadvertently use the confidential or privileged information obtained in the course of the advocate client relationship with the 3rd Plaintiff in favour of the CBK to the detriment and prejudice of the Bank,” says Charterhouse bank.
Lawyer Gitonga argues that there is a possibility of conflict of interest in the firm of Oraro & Company Advocates acting for and representing CBK in the suit in which the bank and its directors inter alia challenge the exercise of purported discretional statutory power by the CBK.
He further said while acting on instructions from CBK, the firm of Oraro & Company Advocates, drafted a restructuring agreement dated August 31, 2009 between the Bank and the CBK.
The said restructuring agreement was signed by the Sanjay and Manoj among other directors on behalf of the Charterhouse Bank.
He added, CBK signed the said restructuring agreement through its then Governor, Prof. Njuguna Ndung’u and he then purported statutory manager of the Bank Ruth Ngure, equally signed the said restructuring agreement.
“Evidently, the said firm of Oraro and Company Advocates was intricately privy to confidential and privileged information on the relationship between the Charterhouse Bank and the CBK as well as confidential and privileged information on the mode of operations or procedures of the bank together with the circumstances and details of negotiation between the parties culminating in the preparation of the restructuring agreement aforesaid, “says the Bank.
The directors argues that CBK failed to discharge its obligations under the restructuring agreement dated August 31, 2009 giving rise to a cause of action and the filing of the suit.
It their submission that an advocate from the firm may very well be called upon to testify in the suit on account of its intricate involvement in the preparation of the said restructuring agreement as well as the circumstances surrounding the same both prior to drafting and post-execution thereof.
