Ex-Imperial Bank directors say CBK officials facilitated fraud

October 13, 2016
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The directors claim that former Imperial Bank Group Managing Director, Abdulmalek Janmohamed who passed on September 15, 2015, maintained an inappropriate relationship with former CBK Governor Njuguna Ndung’u/FILE
The directors claim that former Imperial Bank Group Managing Director, Abdulmalek Janmohamed who passed on September 15, 2015, maintained an inappropriate relationship with former CBK Governor Njuguna Ndung’u/FILE

, NAIROBI, Kenya, Oct 13 – Former directors of the collapsed Imperial Bank have now turned tables on senior Central Bank of Kenya officials claiming that they facilitated fraudulent and irregular disbursements made from the bank.

In an explosive affidavit filed in court by one of the bank’s former directors, Mukesh Kumar Patel, eight directors have accused CBK of being involved in the manipulation of the bank’s schedules.

The directors claim that former Imperial Bank Group Managing Director, Abdulmalek Janmohamed who passed on September 15, 2015, maintained an inappropriate relationship with former CBK Governor Njuguna Ndung’u.

“Indeed, the relationship was one of collusion and corruption and there are emails confirming without doubt that the former Governor of the CBK was compromised by the former Group Managing Director through improper gifts extended to him,” said Patel in court documents.

Imperial Bank Limited, Kenya Deposit Insurance Corporation and Central Bank of Kenya moved to court two weeks ago seeking to recover Sh42billion from the directors.

The bank accused the directors of awarding themselves Sh2.7 billion in dividends despite knowing the bank’s true financial standing.

Imperial Bank sought orders to freeze the shares that the directors own in 42 companies linked to them.

According to the bank, forensic investigations conducted by FTI consulting firm over the financial irregularities at the bank revealed multiple breaches of financial duty on the part of the directors leading to massive losses.

However in response to the suit, the directors poked holes into the report claiming that the bank has not produced the said report by FTI consulting firm in court.

“It is irresponsible for the receiver to swear an affidavit alleging fraud and negligence by the Bank’s Board, in the absence of any material placed before the court in that regard, or such finding by any court of law,” Patel said.

The directors argue that the suit is in bad faith as there is no evidence to show that they participated or contributed in the fraud.

The Directors explained that following Janmohamed’s demise, Naeem Shah (formerly the Bank’s Head of Credit) and James Kaburu (formerly the Bank’s Chief Finance Officer) were appointed on September 16, 2015 as acting Managing Director and Deputy Managing Director of the Bank, respectively.

Upon their appointment, the two informed one of the former directors, Alnashir Popat that the deceased had on numerous occasions initiated and authorized irregular disbursements of vast amounts of money belonging to the bank, which disbursements were concealed from the Board.

The two reported that they had been coerced by the former GMD into effecting these illegal instructions and that the former GMD had threatened to “destroy” them if they did not cooperate.

The appointment of the independent external forensic advisors was considered and FTI Consulting, a firm of reputable international forensic investigators, was contacted on the same day to conduct the audit.

The FTI Preliminary Report confirmed that the Former GMD had been running a scheme of fraudulent and illegal disbursements with certain accomplices, within and outside the Bank, without the knowledge or consent of the Board.

The directors said that the issued was forwarded to CBK and the bank placed under receivership.

However the directors accuse CBK of failing in its statutory obligations and negligence in its execution.

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