Joho Rejects Sh54.5 Million Loan Claim by SBM Bank, Says He Owes Nothing

Mining Cabinet Secretary Hassan Ali Joho is contesting a Sh54.5 million loan arrears claim brought against him by SBM Bank (Kenya) Ltd, asserting that the bank’s lawsuit lacks factual basis and should be dismissed with costs. 

Joho’s legal team filed documents in court maintaining that the loan in question originated with Chase Bank (Kenya) Ltd in 2014, well before its financial collapse and subsequent takeover by SBM Bank in 2018. He argues that his loan agreement was exclusively with Chase Bank, thus SBM Bank has no claim against him. Joho contends that he received a Sh40 million loan from Chase Bank under Islamic banking principles, and has made substantial repayments, including a Sh20.2 million payment facilitated through a law firm. 

Based on his calculations, this should have left a balance of Sh19.7 million, significantly less than the amount SBM Bank is now demanding. To support his argument, Joho references a July 22, 2016, communication from a law firm to Chase Bank’s receiver manager, indicating that Sh23 million was available in an account under his name and should be used to offset the outstanding loan balance. He argues that, with total payments of Sh43.2 million, exceeding the principal borrowed, the bank’s claims are unjustified.

Joho further argues that even if a balance remained, profits calculated on any outstanding sum under Islamic banking principles would not reach the Sh54.5 million claimed by SBM Bank. He categorically denies owing any amount to the lender and demands that the case be dismissed. SBM Bank, however, is steadfast in its position that Joho remains liable for the debt and has sought judgment against him to recover the outstanding amount. The bank maintains that Joho entered into a loan facility agreement with Chase Bank in December 2013, and that this financial obligation transferred to SBM Bank following its acquisition of Chase Bank’s assets.

According to SBM Bank, Joho was disbursed Sh40 million on January 3, 2014, under Islamic banking principles. The agreement stipulated that the loan would be secured by a first legal charge over Apartment 42 at Tamarind Village, Nyali, Mombasa. The bank alleges, however, that Joho failed to submit the original title deed and did not sign the charge document, despite multiple requests.

The bank argues that the loan was specifically intended to finance the purchase of the Mombasa apartment, with repayments to be made through an account Joho maintained with the bank. SBM Bank claims he consistently failed to honour the agreed terms, leading to the accumulation of arrears over time. SBM Bank asserts that, despite multiple reminders issued between 2014 and 2021, only partial payments, amounting to Sh20.25 million, were processed through a law firm's advocate-client account. 

According to the bank, this leaves an unpaid balance of Sh54.5 million as of August 1, 2023. The bank contends that Joho’s default hindered its ability to exercise its statutory power of sale, as the charge instrument was never properly registered due to the missing title deed. Consequently, SBM Bank argues that pursuing a legal suit is its only viable option for recovering the outstanding amount.

SBM Bank states it issued several demand notices to Joho, urging him to clear the debt, but he allegedly neglected or refused to make any payments, leading to the current lawsuit. Peter Chege, SBM Bank’s Manager for Debt Recovery, testified in court documents that Joho’s loan account remains in arrears, accruing default charges until full payment is made. He has petitioned the court to issue a judgment against Joho, inclusive of costs and interest on the loan.

In response to SBM Bank’s claims, Joho has entered an appearance in court and submitted an application requesting an extension of the deadline for filing his defence. He argues that, although the initial timeline for submitting his memorandum of appearance and defense had expired, the court should grant him leeway to have his response deemed as timely filed. SBM Bank had initially sought judgment against Joho on grounds that he had failed to submit his defense within the stipulated period, despite being served with case documents and summons to enter an appearance.

Joho's formal response is likely to prolong the legal battle. The case was scheduled for mention before the Deputy Registrar of the High Court, but proceedings were delayed as the court file could not be located. The matter has been pushed to June 5 for mention, allowing both parties additional time to prepare for the next phase of litigation.