Gold mining firm sues DTB for freezing its accounts


A gold prospecting firm has sued Diamond Trust Bank (DTB) for unlawfully freezing its bank accounts after allegedly receiving instructions from ‘strangers’.

Universal Resources International Ltd says the lender breached its contract after failing to inform it that it had frozen its accounts. Universal Resources says in court documents that its core business is to prospect, explore and extract minerals.

The firm argues in the suit that it acquired an exclusive prospecting licence and a special prospecting licence from the department of mines and geology that allowed it to prospect for copper in Kitui and gold in Ugunja.

“That in the last quarter of 2010 and early 2011, the plaintiff acquired the requisite consents from the community around Voi and Kitui Townships in preparation to extract the said mineral deposits from the said land, a fact well within the knowledge of the defendants,” the suit reads in part.

The firm says after obtaining a report that enabled it to ascertain the capital it would require, it went ahead to secure funding for the project. This saw it approach DTB, among other financial institutions, looking for a direct credit line in the form of a bank guarantee, for financing it had already obtained from Barclays Bank London to commence business.

According to Universal Resources, the deal would see it source for financing to the tune of $1 million (Sh100 million). The firm was to deposit $130,000 (Sh13 million) with DTB and upon the financial close, pay the lender an interest of $300,000 (Sh30 million).

Financial agreement

The firm argues that it went ahead and fulfilled the conditions of the lender and deposited the monies in an account held at the bank. However, the funds were locked in and the company could not access it.

The firm was expecting to make gross income of $7 million (Sh725million) in 2011, $134 million (Sh13.87 billion) in 2012 and $269 million (Sh27.8 billion) in 2013 according to its financial projections. It was on the strength of this document that the firm entered into the financial agreement.

But trouble started after the firm’s officials, Mark Stephenson and Richard Kariuki Githae, in November 2011, transferred $40,000 (Sh4,143,314) from its account to an account in Tanzania.

“Without the knowledge of the plaintiff (Universal Resources) and any colour of right, the first defendant (DTB), illegally, unprocedurally froze the bank account of the plaintiff and it never notified the plaintiff of the said action,” the suit reads.

After a legal battle, a court in 2012 vacated orders freezing the bank accounts. It was at this time that the owners of the firm wrote a letter to the Ambassador of the republic of Kenya in Japan complaining about the lender’s conduct.

“The Kenyan ambassador to Japan wrote a protest letter to the permanent secretary, ministry of foreign affairs, protesting about the unprofessional behavior,” the court documents read.

Special damages

But before the case was finalised, the bank released the entire amount to the ‘plaintiff via instructions from the rightful signatories thus eroding the subject matter of the suit therein instituted by itself.’

That is when Judge J.M Mutava delivered a ruling where he ordered the lender to deposit all the monies contained in the plaintiff’s bank account with the court pending the determination of the suit.

The firm is seeking $60,000 (Sh6,215,924) as special damages and other exemplary damages. The lender is yet to respond to the suit.

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