The High Court has stopped Credit Bank from pursuing a criminal fraud investigation against borrowers involved in a KSh1.2 billion loan dispute, ruling that the lender had improperly turned a commercial disagreement into a criminal matter without sufficient evidence of wrongdoing.
The case centres on loans issued in 2021 to real estate developer Jabavu Village Ltd and pharmaceutical company Hasscon Pharmaceuticals Ltd. The facilities were secured using an office building owned by One Upperhill Towers Ltd.
The conflict arose after the borrowers allegedly defaulted on repayments, prompting Credit Bank to initiate efforts to sell the property under its security rights. This triggered a series of legal battles, including injunctions, commercial suits and appeals, which have kept the parties in court for years.
In November 2025, while the civil proceedings were still ongoing, Credit Bank reported the matter to the Banking Fraud Investigation Unit. Investigators subsequently launched inquiries and summoned company directors in February 2026 over allegations including obtaining credit by false pretences, conspiracy to defraud, forgery, money laundering and organised criminal activity.
Justice Diana Kavedza criticised the move, stating that criminal investigations should not be used as a tool to advance private interests in civil disputes.
“It is not the purpose of a criminal investigation or a criminal charge or prosecution to help individuals in the advancement of their frustrations in their civil cases. This is an abuse of the process of the court and an abuse of the powers conferred upon the DCI and the ODPP in investigations and prosecutions,” she ruled.
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The court noted that although investigators referred to irregularities in documents submitted as security, they failed to clearly identify the alleged discrepancies, explain how they constituted fraud or forgery, or link the company directors to any criminal conduct.
Investigators had argued that they were examining ownership changes, asset transfers and related financial transactions, maintaining that no arrests or charges had been planned and that the summons were solely intended to obtain statements and clarifications.
However, the judge found that the allegations lacked a clear criminal basis. The ruling further observed that the validity of the loan security had never been challenged in court. Instead, the ongoing commercial disputes focused on whether Credit Bank had followed the correct procedures in enforcing its rights over the property.
The contested property has been at the centre of several legal proceedings. Jabavu Village Ltd initially secured court orders preventing the bank from selling the building, although those orders were later lifted and the case dismissed. The dispute later resurfaced through a separate suit filed by One Upperhill Towers Ltd, while an appeal linked to an earlier decision concerning the same property remains pending.
