Court stops lawsuit against Bluebird Aviation directors
Friday, August 13th, 2021 00:00 | 2 mins read
An ownership case between Bluebird Aviation directors has left three of them winning against their co-director in a dramatic five-year battle for a piece of the multi-million firm.
It follows the dismissal by the High Court of a petition by a shareholder derivative suit claiming that co-directors harmed the company by siphoning funds from the airline through tax evasion, fraud and money laundering.
Adan Yusuf, one of the airline’s directors accused fellow shareholders of fraudulently channelling massive funds out of the company as part of a money laundering scheme and wanted the company protected from them.
He also claimed that apart from financial impropriety, he was being sidelined in management of the company.
Principal Judge, Commercial and Tax Division of the High Court in Nairobi, Justice Alfred Mabeya, however, dismissed the suit in its entirety with costs to the defendants.
He ruled that Yusuf, who owns a 25 per cent stake in the airline, had filed the suit with malicious intent, piling maximum pressure on the other three directors.
“The application dated 30/3/2016 is without merit and is hereby dismissed in its entirety with costs to the defendants,” he ruled.
The court heard that Yussuf had invested Sh150,000 as his capital at the inception of the company and never made any further contribution thereafter, but now wanted Captain Hussein Mohamed, Mohamed Abdikadir and Rtd. Col. Hussein Farah to buy him out at an inflated price.
“That from the very beginning, the plaintiff was never involved in the management of the company as he was only approached to buy a share as a potential permanent customer,” said court documents.
Before he joined the firm, Yusuf is said to have been in the businesses of buying and exporting miraa (Khat), at which time his business needed the services of such an airline but never got active in the airline business for 23 years.
Did so willingly
“If he had been excluded, he never took action on it. The Court concludes that he did so willingly,” says the ruling.
The Court ruled that Yusuf failed to give proof of all the allegations leveled against his co-directors, to necessitate the need for protection of the firm from its directors.
It further ordered Yusuf to settle all financial and reputation loss incurred during the period of the case in court.
With six others, Yusuf filed the case in various courts since 2016, where he had claimed the three directors were engaging in financial crimes including siphoning cash to overseas bank accounts.
Court documents say the three directors grew the airline company which had only one aircraft purchased on credit but has since grown to own more than 20 planes.
“It has also found that the plaintiff has not acted as a director exercising independent judgment and that he has alternative remedies not only under the Act, but under the Company’s articles of Association,” said the Court.
The other channels included arbitration as provided for in the Company’s Articles of Association, or through a buy out of his shares and an alternative remedy under section 780 of the Act, which provides for protection of members against oppressive conduct and unfair prejudice.
The findings follows an earlier investigation by the DCI in a deal that roped in Kenya Revenue Authority, Kenya Civil Aviation Authority, Kenya Airport Authority, The Financial Reporting Centre and the company’s bankers which concluded that it was untenable to investigate some of the allegations since the complainant did not provide the foundation for his allegations.