More trouble for Patrick Gakiavih

July 28, 2008
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, NAIROBI, July 28 – The proprietor of the troubled Nyaga Stock Brokers firm, Patrick Gakiavih, has lost a bid to regain access to his assets – including bank accounts – after the High Court Monday reaffirmed an interim order it had issued in April, freezing his property.

Justice Joyce Khaminwa ruled that there was sufficient evidence implicating Gakiavih in numerous irregularities, including siphoning customers’ money into his personal account.

The order will remain in force until the determination of a court case that is probing his alleged irregular dealings.

Justice Khaminwa ruled that the Capital Markets Authority Act and Provisions of the Court Procedure permitted the court to preserve the assets of individuals implicated in fraudulent dealings at the stock market.

She dismissed claims made by Gakiavih’s lawyer Muciimi Mbaka that the brokerage firm was unprocedurally placed under receivership and stated that the firm was properly and legally under statutory management.

She also cast aside claims that the Capital Markets Authority (CMA) erred in law, by obtaining bank statements detailing Gakiavih’s transactions without his consent.

“The principle of privacy may be overlooked especially in the interest of the public,” the Justice ruled.

Gakiavih is accused of mismanaging the brokerage firm, which went under amid allegations of massive irregularities.

CMA consequently placed the firm under receivership after injecting Sh100 million to boost its capital base, which was allegedly mismanaged.

He is among other things faulted for running the firm with a negative working capital, against the CMA rules, overdrawing client accounts and not remitting transfer fees between September 2007 and January 2008.

Other listed irregularities included; fraudulent selling of clients’ shares, failure to maintain written records of transactions at the company and failure to avail the said records for inspection by the CMA.

The authority had moved to court to takeover his accounts in a bid to recover more than Sh523 million, allegedly stolen from the company’s accounts.

CMA petitioned the court to order an inspection of his accounts to verify dealings, saying preliminary investigations conducted by PriceWaterhouseCoopers indicated that he had banked colossal sums of money in his account with Barclays Bank.

The orders also affect his associates, including his wife, with whom he jointly owned the brokerage firm that had seven branches, one each in Nairobi, Limuru, Nyeri, Kagari, Karatina, Sagana and Embu.

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