High Court directs three Safaricom dealers to pay KCB Sh140m debt

The High Court has ordered three Safaricom dealership companies to pay KCB a total of Sh140 million after defaulting on loans issued under Murabaha financing arrangements.

In separate rulings delivered by Justice Rhoda Rutto, Jatcom Agency Limited was directed to pay Sh47 million, Charingcross Communication Agency Sh45.8 million, and Talk Cell Technologies Limited Sh47.2 million.

The court held that the companies and their directors had failed to meet obligations under the Islamic financing contracts through which KCB had advanced them loans in 2022 to fund the purchase of Safaricom products.

“Thus, the court finds that the quantum of the debt has been sufficiently proven, and judgment should be entered for the amount specified in the prayer,” said Justice Rutto.

Murabaha financing allows a lender to buy an asset on behalf of a client and later sell it to the client at a marked-up price, to be repaid in installments.

In this case, Jatcom and Talkcell each received Sh54.6 million, while Charingcross was advanced Sh50.5 million.

The loans were to be cleared in monthly installments over 60 months but the firms defaulted, citing financial difficulties.

The bank told the court that the companies also stopped directing their full dealership commissions to it as required under the agreements, forcing it to seek legal redress.

KCB’s credit recovery manager, Ferdinand Kalafweri, testified that the bank had suffered financial loss and presented evidence including agreements, personal guarantees, and indemnities signed by the directors.

The court ruled that the validity of the Murabaha contracts was undisputed and that the bank had conclusively proven its case.

Justice Rutto found that the evidence showed a binding contract had been breached, paving the way for judgment in favor of the lender.