The High Court has ordered the seizure and auction of EcoBank Kenya’s assets to recover KSh 284 million owed to the estate of former cabinet minister Mbiyu Koinange, escalating a landmark dispute that redefines banks’ obligations in managing estate accounts.

“The onus of ensuring that the bank account is managed accordingly lies with the bank to whom a higher threshold of care is expected,” Justice Ogolla ruled.

In March 2024, the Mbiyu Koinange estate filed suit against the lender, seeking an accounting of the missing funds and disclosure of the beneficiaries of the withdrawals. In its defense, EcoBank had stated that it acted only on instructions from account signatories and was never served with the 2011 order. However, this explanation was dismissed as irrelevant and negligent.

In the 2011 ruling, Justice David Maraga -who later became Chief Justice- ordered that the part of the funds accrued from the sale of Closeburn Estate in Runda, amounting to KSh 284 million, were to be placed in an account at EcoBank under the estate’s name. The funds were to remain untouched without further court approval, an order that became central to the latest ruling holding EcoBank liable after the money was withdrawn.

In its ruling, the court emphasized that the nature of an estate account imposes heightened responsibilities on financial institutions. The judgment establishes a precedent for the financial sector. Lenders can no longer rely solely on customer mandates when handling estate accounts but must independently verify their authority to release funds.

Institutions now face the prospect of court-sanctioned liability for losses from estate accounts, regardless of instructions from authorized signatories.

The ruling adds a new layer of compliance obligations for banks, particularly in succession and trust-related matters, facing the possibility of court-sanctioned liability for losses from estate accounts, regardless of instructions from authorized signatories.

The succession dispute over the estate of former powerful cabinet minister Mbiyu Koinange has dragged through the courts since his death in 1981, making it one of the country’s longest-running inheritance battles. Koinange, a close confidant of Kenya’s first president Jomo Kenyatta, left behind vast landholdings, properties, and businesses.

His passing set off decades of litigation among widows, children, and extended family members, with competing claims to his multimillion-shilling estate.

Over the years, courts have issued numerous rulings on the administration and distribution of the estate, appointing different administrators and supervising the sale of assets to settle disputes.