BY SAM ALFAN.
Royal Media Services chairman S.K Macharia has suffered a major blow as High Court ordered him to refund Sh400 million he wired from Directline Insurance Bank account.
While ordering the media mogul to wire back the funds, high court Judge Alfred Mabeya said the transfer of the funds by Macharia to a firm linked to him was not only unlawful and illegal but meant to financially cripple the insurer.
The funds were wired from Directline’s bank account at DTB Bank to Toy and Suna Holdings, a company owned by Dr Macharia.
“This is in order to meet the ends of justice and to secure the interest of the policy holders of the plaintiff and the claimants for compensation,” said the judge.
Macharia who is fighting to take control of Directline Insurance since the death of his son John Gichia, who was the majority shareholder at the underwriter.
Justice Mabeya further ordered the formation of a joint board to be constituted by by AKM Investments limited, Janus limited and Royal Media Services.
The judge said the interim board should also conduct forensic audit Directline Insurance books of account with 90 days from the date of the ruling.
The judge further directed the bank signatories to be appointed by interim board of directors.
“I am satisfied that not only has the Directline Insurance established a prima facie case, but has demonstrated that unless the actions of the directors are reversed and they are restrained as sought, Directline Insurance will suffer irreparable loss and damage,” ruled Judge Mabeya.
SK Macharia, Mburu,Orenge,Mogeni,Gitoho and Toy and Suna Holding limited were restrained from purporting to act for or on behalf of the Directline Insurance in any capacity whatsoever.
The court further issued temporary injunction restraining them whether by themselves, their servants, agents or any of them from physically accessing the Directline’s offices at Hazina Towers or elsewhere or any other premises or property of Directline Insurance pending hearing and determination of the case.
“An Order be issued restraining SK Macharia, Mburu,Orenge,Mogeni, Gitoho and Toy and Suna Holding ltd, DIB Bank and Atanas Maina whether by themselves, their servants from withdrawing, transferring or carrying out or allowing or suffering the withdrawal, transferring or carrying out of any transactions whatsoever with respect to the funds held in the DTB Bank’s Account number in Sh. 400 million plus all accrued and accruing interest held at the DTB Bank unless so authorized by the Majority Shareholders of Directline Insurance Board of Directors (as duly appointed/elected by the insurer’s majority shareholders,” court ruled.
Court issued other restraining orders.
Justice Mabeya said that the court recognizes the significance of the insurance business and its crucial role in providing financial protection and security to individuals and entities. An insurance company is a regulated entity.
“This means that it operates under strict compliance with the law. Given the margin of risk involved in its operations, it must adhere to regulatory standards that ensure financial stability and protect policyholders. That cannot be said of Directline Insurance due to the unending and ongoing wrangles,” said the judge.
He added that this is the best example of how not to manage or govern a company. “It is poor corporate governance. The company’s management is currently non- functional. This negatively impacts policyholders who require their claims to be addressed. If this situation persists, the company risks financial distress,”
“The Court is alive to the fact that granting these orders would effectively bar the respondents from participating in the company’s management,” said the judge.
Court noted that there is an ongoing dispute regarding the company’s shareholding that is currently pending resolution. The arbitration award is also before the Court and is yet to be either recognized and adopted or set aside.
The judge, however, declined to determine the issues related to the management and shareholding of the company.
Terry Wanjiku Wijenje rushed to court accusing Macharia of interfering with the running of the firm and firing employees.
Wijenje said maintained that she holds a 20 percent share in Janus Limited and that the majority shareholder and the dispute at the company arose following the death of John Gichia, Dr Macharia’s son.
She said Dr Macharia, his wife and Royal Credit Limited hold 9.664 percent shares while AKM Investments Limited, Janus Limited, Sure Invest Company Limited, Stenny Investment Pty Limited, and Triad Networks Limited collectively held 90.336 percent shares of the company.
She said Dr Macharia’s takeover involved irregular appointments of additional directors which in contravention of the Companies Act.
