Bank Accused Of Taking Sides In Union Labour Dispute

A serious power struggle threatens to split the once vibrant Kenya Union of Water and Sewage with a membership of over 3,000. The Cooperative Bank of Kenya is also in the spot lite accused of siding with one party in the dispute, which has resulted in the suspension and flagging of the union’s account at the bank.

The bank suspiciously approved members’ signatures to be changed without first following established procedures. According to the union’s bona fide General Secretary Elijah Otieno Awach, he went to court seeking orders to quash the decision of the bank dated 03.05.2023 flagging or freezing the union’s bank account number 011202012192+ + held at the banks’ Buruburu Branch. It is claimed that bank officials colluded with other former union officials and flagged the account wherein sums belonging to members are held.

The union runs its affairs including payment of salaries and allowances to employees and officials, paying office rent, recruitment of members, and training amongst other costs, from the said bank account. It is unfortunate that union employees are not able to get their salaries from the account and that the move has paralyzed the operations of the union. On 26.04.2023 the union’s general secretary Otieno Awach issued cheque number 000580 for the sum of Kshs.24,000/= to a member of staff Mr Julius Amba Otieno, who on presenting the cheque at the bank, was informed that the bank account had been flagged and that there was a change in the specimen signature of the union’s National Chairman Bashir Ahmed Mohamed.

 A meeting was held between Awach (Secretary General) and the bank’s legal officer, who gave him a letter confirming the change of the specimen signature which was not approved by the union’s top decision-making organ. Mr Awach claims that the decision by the bank was drastic, had the effect of grounding the union operations, and was detrimental to the members and employees of the union who had not been paid salaries from January 2023. Mr Awach further reported that the change of specimen signature of Bashir Ahmed Mohamed was made without material disclosure, and, that the bank did not have the authority to freeze the account of the union without a resolution by the union’s National Executive Committee, presented to the Bank by the General Secretary.

It is being claimed that the bank received a letter from George Olwalo who signed as acting Secretary General of the union requesting for a change in signatories to the disputed bank account, citing resolutions of the National Executive Council meeting passed on 11.03.2023. In reply, the bank wrote to the union declining the request and asked the union to furnish it with a letter from the Registrar of Trade Unions approving the change of signatories. On 15.03.2023 the bank received a letter from the union’s treasurer, Walter Muga, disputing the purported National Executive Council meeting held on 11.03.2023 allegedly convened by George Olwalo and the resolutions passed thereunder. The bank ought to have maintained the status quo and allowed the bank account to operate but instead, they flagged off the account on the advice of the acting secretary general and without any proof that he was indeed the acting secretary general. It is claimed that the bank made the decision to temporarily flag the account against any withdrawals pending the resolution of the dispute regarding the bona fide signatories of the account without consulting the union leadership but on a letter signed by the purported acting secretary general.

The bank is also under fire for taking sides and acting on instructions of a person (George Olwalo) purporting to be the secretary general and who claimed that the bonafide secretary general (Awach) was suspended from holding the position of General Secretary.

Even the courts found the bank of taking sides instead of ordering status quo and that the bank has no authority to resolve that dispute. The bank has also been found on the wrong side of the law for suspending the account yet the law is very clear that a bank should not suspend or close an account without giving notice to the account signatory at least fourteen (14) days’ notice. However, if the bank is required to freeze the account with statutory requirements or legal obligation, a post-freeze notice should be given to the customer promptly.”   

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