Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Regulator launches probe at CMC Motors

NAIROBI, Kenya, Sep 15 – The Capital Markets Authority has launched a forensic audit into claims of clandestine offshore accounts opened by two former directors of vehicle dealer CMC Motors.

This follows a meeting held on Thursday between the regulator and the directors of CMC over board wrangles that have emerged following proposed changes in the company’s operations.

On Wednesday, CMC Group Chief Executive Officer Bill Lay claimed that two former directors (whom he did not name) had opened ‘illegal’ offshore accounts containing hundreds of millions of shillings in the Island of Jersey, United Kingdom.

Briefing the press after the meeting, CMA Chairman Kung’u Gatabaki said members from the fraud department had already been dispatched to CMC offices to investigate adding that stern action would be taken against offending parties.

“If indeed we suspect that there are instances of fraud, we will not hesitate to even take the directors to court,” Gatabaki said.

Though investigations into the accounts are still ongoing, one of them is said to have over Sh240 million.

CMC’s profitability has been declining over the years forcing a series of changes to the company’s board and management.

Dispute at the board of CMC stems from differences between the directors, representing the interest of major shareholders.

The meeting also comes barely a week after Peter Muthoka was ousted as chairman and subsequently replaced by Joel Kibe sparking off a fresh row.

Muthoka’s removal stems from his involvement as CEO of Andy Forwarders Services, a logistics supplier to CMC that Lay said had overcharged CMC in some instances by as much as 100 times the market rate, making the company uncompetitive in the market.

Advertisement. Scroll to continue reading.

Gatabaki said that CMA regulations require that the board of a public company be chaired by a non-executive and independent director who is defined, among other criteria, as not having had any business relationship with the company other than service as a director.

“It is the board’s responsibility to balance all those interests and ensure the operations of the company are not governed by the extension of the shareholders but with the infusion of independent directors,” he said adding that had the board been composed of independent directors non of the current issues would have emerged.

Other proposals made by the regulator to CMC were the need to institute strong corporate governance structures as well as appointing independent directors.

CMC is currently implementing a business transformation program, set to take effect on October 1 as it seeks to boost its operational efficiency. Gatabaki said they had endorsed the plan and given the go ahead for it to continue with the process.

Currently ranked the fourth largest automobile dealer in the country, the company is looking to cut down its structural cost by as much as half a billion shillings and grow its market share to 20 percent in the net financial year.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...

Headlines

NAIROBI, Kenya, Mar 16 – The World Bank has given the Kenyan government USD 60 Million (Sh6.1 billion) to help combat the deadly coronavirus pandemic...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...