This archive report was first published on 29 April 2021.
On April 29, 2021, a Senate committee on finance and budget was informed that billionaire Naushad Merali's withdrawal of Sh. 1.7 billion from Spire Bank in 2016 was a vote of no confidence in the lender.
Spire Bank, which was sold to Kenyan teachers under the Mwalimu Sacco in 2015, has been struggling to stay afloat. The bank's capital crisis persists despite efforts to find a strategic partner to pump in money and boost its core capital.
After the takeover, it became apparent that the teachers had been given a raw deal by Merali. The billionaire had pocketed a whopping Sh. 2.4 billion for his seventy-five percent stake in the bank, which was operating as Equatorial Commercial Bank at the time.
“One thing we are aware of is that when Mr Merali was still part of the bank, he had huge deposits there to the tune of Sh. 1.7 billion which he, later on, withdrew in 2016,” said Mwalimu National Sacco chairman Wellington Otiende.
Depositors withdrew a total of Sh. 2.2 billion within three years, with Sh. 1.79 billion withdrawn within the first year alone. The bank's office building, Equatorial Fidelity Centre in Nairobi's Westlands area, was transferred to its associate company Fidelity Shield Insurance ahead of the transaction.
Former officials of the sacco were accused of conflict of interest, with former CEO Robert Shibutse having worked for the then Equatorial Commercial Bank and other companies associated with Mr Merali.
