Kenyan firm wants Central Bank to investigate Citi Bank

The firm wants the lender cited for breach of contractual obligations and possibly unethical banking practices.

It all began in 2018. A deal that was sold as a panacea to grow one of Kenya’s homebred businesses to a global scale. The match-making pitting Adrian Kenya Limited and CITI Bank N.A Kenya.

The meeting held at Fairview Hotel in Nairobi gives a glimpse of how the international bank lured the firm. A $10 million credit facility was made available to the firm in exchange for onboarding.

In documents seen by Citizen Digital, Adrian Kenya Ltd says it opted to open operational accounts at CITI Bank after it was sold the lucrative financing deal.

“These accounts were designed to facilitate day-to-day banking transactions, including but not limited to deposits, withdrawals and funds transfer,’ it says in a complaint it has lodged with the Central Bank of Kenya against the lender.

During the period of engagement, Citi Bank later scaled the credit facility to $14 million. This, the two agreed, was to necessitate crucial liquidity to support Adrian Kenya Ltd's operational and strategic activities.

In return, the firm registered various types of securities to safeguard the facility and ensure the bank's interests were secure in the deal.

“This included the creation of an all-assets debenture over its assets, multiple land charges, deeds of assignment and corporate guarantees,’ the firm says in its complaint.

The execution of this deal was underpinned by Adrian Kenya Ltd payments from contracts and business engagement.

In simple terms, for any business that the firm did, payments would be channelled through Citi Bank. The lender would then deduct its monthly repayments of the facility and allow the firm to utilize the balance as it so wished.

In 2021 however, Adrian Kenya Ltd says, the lender began a systematic process to frustrate it. It says it won a contract with Athi Water Works Development valued at Ksh.63 million, but the lender refused to issue them with a letter of credit.

“Citi Bank authorized the payment of the deposit of 20% and declined to issue a letter of credit for the balance to date,” It adds to the letter dated May 3 to the regulator.

In 2022, it again said it won a contract with KENGEN worth Ksh.36 million, Citi Bank went ahead and made an advance payment and later issued a letter of credit.

“Suddenly and without communication, Citi Bank withheld the letter of credit an action which severely affected the KENGEN project which in turn led to the client terminating the contract citing effluxion of time and non-performance on the part of AKL” the document reads in part.

In 2023, the firm claims Citi Bank withheld funds in its accounts without justification. On diverse dates between May 4 and May 30th 2023, AKL says its accounts were credited with Ksh.148 million by Safaricom.

As per the deal, Citi Bank was only to deduct $138,000 from its accounts and leave open the balance for AKL use.

“Citi Bank decided to hold the entire sum, without proper explanation or communication to AKL, an action that was in breach of the agreement…The bank's actions hampered performance of contracts within Safaricom PLC and ATLAS Towers,” reads the document.

It adds that this further affected its ability to pay debts to critical suppliers and stakeholders such as the Kenya Revenue Authority among others.

But still, AKL would go back to the lender in an approach it hoped would harmonize an operating environment characterized by a harsh economic period. This AKL premised on the high dollar-to-shilling exchange rate at the time.

In January 2024, AKL wrote a letter to the bank seeking among others a Ksh.150M project financing line to support its business.

It also asked for a Ksh.300M working capital line for operational requirements. AKL also sought a Ksh.55M overdraft to meet its recurrent expenses.

This, the firm says, all fell on deaf ears as the lender has severally ignored its request for meetings and letters to discuss their relationship.

However, when a small window to engage emerged, AKL says it was shocked to land confidential information within Citi Bank.

The firm reports to CBK that a stray email opened the lid in the form of briefing notes to the bank honchos. In the document that AKL has attached to the complaint, Citi Bank expressed that it intended to discontinue doing business with Adrian Kenya Limited.

The notes say in part; “The objective of this relationship remains to be Exit. However, Citi is determined to continue supporting the client to deliver on their framework and ensure continuous generation of cash flow for exposure paydown. This will ensure an orderly exit.”

As a result, AKL is asking the Central Bank of Kenya to initiate investigations on Citi Bank’s conduct and hold them accountable for the loss of business it has caused them. The firm is also pleading with the regulator to order full financial restitution for all losses it has incurred.

On the decision to report Citi Bank to the Central Bank of Kenya, AKL says it had raised a formal complaint with the lender as stipulated in the prudential customer guidelines but has not received a substantive response.