High Court Orders Seizure of Ecobank Kenya Assets Over Sh840 Million Estate Liability

The High Court has ordered the seizure and auction of Ecobank Kenya’s assets to recover Sh840.6 million owed to the estate of former cabinet minister Mbiyu Koinange, marking a landmark case that fundamentally redefines banks’ fiduciary obligations in managing estate accounts.

The total amount includes Sh284 million principal amount that was illegally withdrawn from the estate’s account in 2011, and Sh556.6 million in accrued interest, according to court documents filed in one of Kenya’s longest-running succession disputes.

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Court Orders Immediate Asset Auction

The enforcement directive, issued on September 19, 2025, authorizes Moran Auctioneers to attach and sell the lender’s movable property after providing a 15-day notice and making due proclamation. The warrant commands the auctioneer to return the execution order by November 18, 2025, with certification of how it has been executed or why it remains unexecuted.

The order stems from a comprehensive judgment delivered on June 26, 2025, by Justice Eric Ogolla, who found EcoBank liable for allowing irregular withdrawals from an estate account despite a prior court order requiring judicial approval before any disbursement. Justice Ogolla emphasized that financial institutions now face the prospect of court-sanctioned liability for losses from estate accounts, regardless of instructions from authorized signatories.

“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, establishing a new benchmark for banking sector compliance.

Historical Context of the Koinange Estate

The succession dispute involves the vast estate of Peter Mbiyu Koinange, one of Kenya’s most influential political figures who died on September 3, 1981, without leaving a will. Koinange, who served in President Jomo Kenyatta’s cabinet for 16 years, was a close confidant of Kenya’s first president and held multiple ministerial portfolios including Minister of State in the Office of the President, Education, External Affairs, and Pan-African Affairs.

Born in 1907 in Njunu, Kiambu District, Mbiyu Koinange was the first Kenyan African to hold a postgraduate degree. He attended prestigious institutions including Hampton Institute in Virginia, Ohio Wesleyan University, Columbia University, Cambridge University, and the University of London Institute of Education before returning to Kenya in 1939.

As the son of Senior Chief Koinange wa Mbiyu, a prominent Kikuyu chief, and brother to Grace Wanjiku (Jomo Kenyatta’s third wife), Mbiyu occupied a unique position at the intersection of traditional authority and modern political power. He was instrumental in establishing independent African education through institutions like the Kenya Teachers College at Githunguri.

The Koinange family lineage represents one of Kenya’s most influential dynasties, with Senior Chief Koinange wa Mbiyu having six wives and 34 children who became prominent figures across various sectors including politics, business, education, and media.

The Four-Decade Legal Battle

The Koinange estate, estimated to be worth Sh14 billion, has been embroiled in litigation since 1981, making it one of Kenya’s longest-running inheritance battles. The estate has 12 beneficiaries spread across four widows: the late Loise Njeri Mbiyu (with five beneficiaries), Ruth Damaris Wambui Mbiyu (five beneficiaries), Margaret Njeri Mbiyu (one beneficiary), and Eddah Wanjiru (one beneficiary).

The estate was initially distributed in 2015 by Justice William Musyoka, but two widows – Ms Wanjiru and Margaret Njeri Mbiyu – were excluded. They successfully appealed, and the Court of Appeal ordered redistribution by a different judge, recognizing all four women as legitimate widows of the late minister.

It was not until four decades after his death that Justice Aggrey Muchelule (now a Court of Appeal judge) made significant progress in distributing the vast estate, highlighting the complexity of succession matters in Kenya’s legal system.

The Banking Dispute Unfolds

The specific dispute with Ecobank centers on the 2011 court order by then-Justice David Maraga (who later became Chief Justice) directing that proceeds from the sale of Koinange’s Closeburn Estate in Runda, amounting to Sh284 million from the total Sh1.1 billion sale, be placed in an Ecobank account under the estate’s name. The funds were explicitly ordered to remain untouched without further court approval.

However, the money was subsequently withdrawn by lawyers involved in the succession case without obtaining the required court authorization. Court papers reveal that the signatories to the account were advocates, with the account mandate requiring all signatories to sign jointly.

In March 2024, the Koinange estate filed suit against Ecobank, seeking an accounting of the missing funds and disclosure of the beneficiaries of the withdrawals. The estate was represented by Senior Counsel Paul Muite, who argued that the account was a trust account opened through a court order and that Ecobank needed court approval to release any funds.

Ecobank’s Defense Rejected

In its defense, Ecobank argued that it had acted solely on instructions from authorized account signatories and claimed it was never served with the 2011 court order. The bank attempted to demonstrate that payments were made to lawyers, arguing this justified the withdrawals.

However, Justice Ogolla dismissed these explanations as inadequate and negligent. The court found that since the lost amount was substantial, it could not have been moved, transferred, or disposed of without attracting the attention of the bank’s responsible managers.

“This court has noted with disturbing concern the negligent manner in which Ecobank treated the estate’s account,” Justice Ogolla stated. “The estate of a deceased person is a special estate protected by the law and administered by the court through appointed administrators. Where an account is opened in a bank in the name of the estate, the bank must take constructive knowledge of the special category of the customer.”

The court determined that Ecobank’s treatment of the estate account was “casual and negligent,” constituting what Justice Ogolla characterized as “wilful negligence, if not wilful fraud.”

Implications for Kenya’s Banking Sector

The ruling establishes unprecedented legal precedent for Kenya’s financial sector, fundamentally altering banks’ obligations when handling estate accounts. Under existing banking regulations and fiduciary principles, financial institutions are required to exercise reasonable care and skill in their dealings with customers.

The judgment extends these obligations specifically to estate accounts, where banks must now independently verify their authority to release funds rather than relying solely on customer mandates. This represents a significant shift from traditional banker-customer relationships, where financial institutions typically honor properly signed instructions from authorized signatories.

Legal experts note that the ruling places banks in a fiduciary relationship with estate beneficiaries, meaning they owe a duty of utmost good faith and must act primarily in the beneficiaries’ interests. This creates a higher standard of care than typical commercial banking relationships.

“It is the finding of this court, and I so hold, that Ecobank owed a duty of care to the estate, and that it stood in a fiduciary relationship to the estate and must therefore be held fully accountable to the estate and its beneficiaries,” Justice Ogolla declared.

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Banking Industry Response and Concerns

The ruling has sent ripples through Kenya’s banking community, as it significantly expands the scope of banks’ liability in succession matters. Financial institutions must now implement more rigorous due diligence procedures when dealing with estate accounts, potentially including:

Enhanced Account Monitoring: Banks must maintain heightened vigilance over estate accounts, with senior management oversight for significant transactions.

Court Order Verification: Financial institutions are now obligated to independently verify the existence and terms of any court orders affecting estate accounts, rather than relying on customer representations.

Legal Documentation Requirements: Banks may need to request comprehensive legal documentation before processing any withdrawals from estate accounts, including court orders and administrator appointments.

Fiduciary Training: Bank staff handling estate accounts will require specialized training in fiduciary duties and succession law to meet the new standards established by the court.

The Central Bank of Kenya, which regulates the banking sector, has yet to issue specific guidance following the judgment, but industry observers expect new regulations addressing estate account management procedures.

Broader Legal and Social Implications

The Ecobank case highlights persistent challenges in Kenya’s succession system, where lengthy court proceedings and complex family dynamics often lead to protracted disputes. The four-decade Koinange estate battle exemplifies how succession matters can become generational conflicts, affecting multiple family members across decades.

Kenya’s succession laws, governed by the Succession Act and various customary law provisions, create a complex legal framework that can be difficult to navigate, particularly for large estates with multiple beneficiaries. The Koinange case demonstrates how incomplete estate planning (dying without a will) can create lasting legal complications.

The ruling also reflects evolving judicial attitudes toward institutional accountability. Rather than accepting traditional defenses of “following customer instructions,” courts are increasingly holding financial institutions to higher standards of due diligence and customer protection.

Financial Sector Regulatory Framework

The judgment intersects with Kenya’s broader financial sector regulatory framework, which includes anti-money laundering regulations requiring banks to monitor large cash transactions and report suspicious activities. Under Central Bank of Kenya circular notices, financial institutions must exercise enhanced due diligence for significant transactions, particularly those involving trust or estate accounts.

The Ecobank ruling suggests that these existing regulatory requirements may be insufficient for estate accounts, which require specialized handling due to their unique legal status. Estate accounts exist in a regulatory grey area where banking law, succession law, and trust law intersect, creating complex compliance obligations.

Impact on Estate Administration

The judgment will likely accelerate reforms in estate administration procedures across Kenya’s legal system. Currently, estate matters are handled by various court registries with inconsistent procedures and documentation requirements. The Ecobank case demonstrates the need for standardized protocols linking court orders with banking procedures.

Legal practitioners specializing in succession matters expect increased collaboration between courts and financial institutions to develop clearer procedures for estate account management. This could include standardized court order formats, direct communication channels between registries and banks, and regular verification procedures for ongoing estate accounts.

Economic Consequences

The Sh840.6 million judgment against Ecobank represents one of the largest financial penalties imposed on a Kenyan bank in a civil dispute. The amount includes Sh556.6 million in accrued interest, highlighting how prolonged legal disputes can exponentially increase financial liability through compound interest calculations.

For Ecobank, the judgment represents a significant financial blow that will likely impact quarterly earnings and regulatory capital ratios. The bank may need to make additional provisions for legal contingencies and implement costly procedural changes across its branch network.

The broader banking sector faces potential increased operating costs as institutions invest in enhanced compliance systems, staff training, and legal verification procedures for estate accounts. These costs may ultimately be passed to consumers through higher banking fees or reduced interest rates on deposits.

Future Legal Precedents

The Koinange v. Ecobank judgment establishes several important legal precedents that will influence future banking litigation:

Fiduciary Duty Extension: The ruling extends fiduciary duties beyond traditional trustee relationships to include banks handling estate accounts, creating new liability frameworks.

Independent Verification Obligation: Banks can no longer rely solely on customer instructions but must independently verify their legal authority to process estate account transactions.

Institutional Accountability: Financial institutions face enhanced liability for procedural failures, even when acting on seemingly proper customer instructions.

Succession Law Integration: The judgment integrates banking law with succession law, requiring financial institutions to understand and comply with probate procedures.

Legal scholars expect this precedent to influence similar cases across East Africa, as regional banking regulations and succession laws share common colonial-era foundations.

Path Forward for the Banking Sector

Industry associations, including the Kenya Bankers Association, are likely to develop new guidelines for estate account management in response to the judgment. These may include standardized procedures for:

• Account opening documentation for estate accounts
• Verification procedures for court orders and administrative appointments
• Transaction monitoring and approval processes
• Staff training and certification requirements
• Regular compliance audits and reviews

The Central Bank of Kenya may also issue new prudential guidelines addressing estate account management, potentially including specific capital adequacy requirements and risk management procedures for banks handling significant estate portfolios.

Conclusion: A Watershed Moment

The Ecobank Kenya asset seizure order represents a watershed moment for Kenya’s banking sector, establishing new standards of institutional accountability in succession matters. The judgment transforms estate accounts from routine banking products into specialized fiduciary relationships requiring enhanced due diligence and legal compliance.

For the Koinange family, the ruling provides long-overdue resolution to a four-decade legal struggle, though the broader estate distribution remains pending. The case demonstrates both the complexity of Kenya’s succession system and the evolving role of courts in holding financial institutions accountable for their stewardship responsibilities.

As Moran Auctioneers prepares to execute the asset seizure order, the banking sector faces a new regulatory reality where customer service excellence must be balanced with rigorous legal compliance. The ultimate impact will depend on how effectively financial institutions adapt to these heightened standards while maintaining operational efficiency.

The case serves as a powerful reminder that in Kenya’s evolving legal landscape, institutional power comes with corresponding responsibility – a principle that extends far beyond the banking sector to all entities entrusted with public or private wealth management.

For stakeholders across Kenya’s financial ecosystem, the message is clear: the era of casual estate account management has ended, replaced by an exacting standard of fiduciary excellence that prioritizes beneficiary protection above institutional convenience.

This case represents one of several high-profile banking disputes currently before Kenyan courts, reflecting growing public expectations for institutional accountability in financial services.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

24th September, 2025