Court rules against an audit of Sh12bn Lakestar Insurance claim

Lakestar Insurance has lost a bid to reopen Sh12 billion claim against the Insurance Regulatory Authority (IRA).

This came after a petition by Administrator Geoffrey Kipkoech to the court to call for an audit of the company stating the regulator hatched a scheme to mismanage and misappropriate the company assets when it was placed under statutory management, to wind up Lakestar Insurance.

Mr Kipkoech argued that the regulator misused their statutory powers and further contributed directly or indirectly to the collapse of the underwriter and that the statutory manager colluded to defraud the company and frustrated efforts by local investors to inject capital into the company to revive it.

He was seeking an award of Sh2 billion for business opportunities lost, Sh3.7 billion for loss of property, capital gains, and cash loss as well as Sh6.2 billion for reputation damage.

However, speaking during the ruling, High Court Judge David Majanja argued that allowing the call for an audit of the activities of the statutory manager before the company was wound up, as requested by Geoffrey Kipkoech, would result in the courts prying open matters that had already been decided by other judges’.

Judge Majanja ruled that the application by Mr Kipkoech, the administrator of the estate of John Kipkemboi Kilel, was an attack of the judgment issued decades ago, allowing the winding up of the company.

According to the judge, the forum for attacking a judgment is not through the filing of a “second suit dressed up under the guise of an action for damages”, but to lodge an appeal against the judgment or apply to set aside that judgment.

The court has already adjudicated the complicity of the Deceased (Mr Kilel) and his fellow directors in the collapse of the company by a judgment issued against them. That judgment cannot be wished away by a side wind in collateral proceedings,” He stated.

IRA commissioner Godfrey Kiptum opposed the case saying Mr Kilel was responsible for its collapse through misuse and siphoning of funds, hence cannot claim compensation.

Mr Kiptum pointed out that Mr Kipkoech was an active participant in the winding-up case and he has previously sought to set aside the order at least twice. Kiptum added that Lakestar did not appeal against the judgment and seek to suspend the orders, leaving the company with a debt of Sh47 million, which is yet to be paid Mr Kilel together with other directors, shamelessly fleeced, embezzled assets, and defrauded the Company over Sh176 million over four years, leading to its collapse.