BY SAM ALFAN.
Veteran lawyer George Oraro has been dealt a blow after and his law firm was blocked from representing Central Bank of Kenya in a case challenging the closure of Charterhouse Bank.
A three Judge bench of the high court blocked Oraro and Company Advocates from acting for the banks’ regulator in the matter.
Justices Hedwig Ongudi, Enock Mwita and Lawrence Mugambi ruled that having acted for both CBK and Charterhouse Bank previously, Oraro could not represent CBK in the matter.
The court noted that the law firm was involved in preparing and drawing the agreement which forms part and parcel of the litigation before court.
The judges, therefore , ruled that the firm cannot choose one side to represent in the transaction in which it might be called as a witness.
The court observed that Oraro and his firm were conflicted in the proceedings between CBK and Charterhouse Bank.
“We therefore hold and order that the firm of Oraro and company advocates be and is hereby disqualified from acting for the Central Bank of Kenya,” ruled the three Judge bench.
The bench observed that the restructuring agreement raises substantive issues that are in controversy between the parties in the suit.
Chartehouse Bank’s contention is that despite fulfilling their obligations as set out in the Restructuring Agreement, CBK did not hand over the lender to its directors but instead, CBK’s Statutory Manager has recommended its liquidation to the Kenya Deposit Insurance Corporation(KDIC) contrary to the terms of the agreement.
The court noted that it was evident that the restructuring agreement is one of the material facts upon which this suit was founded.
According to the court, Oraro and Company Advocates may naturally be required to shed light on the preparation and drawing of the document if and when the matter goes to trial.
“The argument that it will provide an Advocate should the matter come to that will not resolve the fact that the firm is conflicted. The conflict of interest applies to the entire firm, not to a specific advocate. The document was drawn by the said firm, and it does not indicate anywhere that a specific advocate drew it,” ruled the bench.
Senior Counsel Paul Muite and lawyer Martin Gitonga told a three-Judge High Court bench there existed an Advocate-Client relationship between Charterhouse Bank and Oraro and Company Advocates between 2007 and 2012.
During the hearing,They asserted that the law firm was privy to confidential and privileged information relating to the bank’s operations that are subject of the liquidation dispute.
The court heard that Senior Counsel George Oraro represented CBK in all matters touching on the statutory management and purported liquidation of Charterhouse Bank.
On instructions from CBK, Oraro reportedly drafted a restructuring agreement dated August 31, 2009 between CBK and Charterhouse Bank.
Muite and Gitonga said the circumstances and implementation of the contentious agreement is at the core of the dispute that is pending adjudication.
One of the bank’s directors, Manoj Shah, said there was real and imminent conflict of interest for Oraro to act for CBK when it is accused of failure to discharge it’s obligations under the restructuring agreement. The main prayer by Charterhouse Bank seeks an order for specific performance to compel CBK to facilitate the restructuring.
