Some senior managers being pursued over the collapse of Imperial Bank have objected to the a move to attach their properties, saying this was meant to give the shareholders false hopes of reopening the bank.

This effectively opens up a lengthy legal battle as the bank seeks $340 million it had hoped to get through the disposal of attached properties.

Kenya’s Central Bank had indicated that Imperial could be reopened after shareholders were presented with a proposal for recovery and collateralisation of the irregular loans, as well as injection of new capital and conversion of some of the large deposits into equity.

In their affidavits, Imperial Bank’s managing director Naeem Shah, the family of the deceased former chief executive Abdulmalek Janmohammed, and James Kaburu, the current deputy chief executive, have   distanced themselves from the fraud, and asked the court to throw out any attempts by Imperial Bank to attach their properties in a bid to recover the said lost millions.

Through lawyer Ahmednassir Abdullahi, Mr Shah denies making any confessions about his alleged role in helping Mr Janmohammed embezzle $340 million of depositors’ funds.

Mr Shah argues that the fraud was perpetrated by Imperial Bank directors in collusion with CBK officials as the former controlled the affairs of the company, and not employees.

Last month, the collapsed bank, through its receivers the Kenya Deposit Insurance Corporation, sued Mr Janmohammed’s family, Mr Shah, Mr Kaburu and 20 companies and individuals accused of colluding with Janmohammed to siphon money out of the bank.

It successfully obtained a court order freezing the assets of all the individuals and companies sued. In their response, the Janmohamed family said their wealth was earned outside the proceeds of his alleged fraudulent activities.

In their affidavit, Janco Investments, a company owned by Mr Janmohammed, his mother and two brothers,  said KDIC only filed the suit to create the impression that it can recover the amount, and deflect attention from the CBK’s failure to effectively supervise the bank.

“The suit is merely a fishing expedition designed to create a false hope that Imperial Bank has some chance of recovering some money by casting its net far and wide. It is equally confusing that Imperial Bank purports to sue third parties for its own internal failings. The suit is frivolous and a classic case of abuse of the court process,” said the firm.

In late October, KDIC, through its lawyer George Oraro, indicated that a speedy recovery of the money will be key in the bank’s future, because the receiver’s decision to reopen the bank or liquidate it will depend on whether the bank can trace and recover the amounts that have been illegally obtained.