NAIROBI, Kenya, Feb 6 – Auto dealer CMC Holdings is set for a major shake-up after the Capital Markets Authority (CMA) undertook to appoint a third of the directors to an interim board.
In a statement, CMA said it would pick an independent chairman to head the caretaker board which will however retain the current Chief Executive and Finance Director to provide continuity in the operations of the company.
“The Board of the Authority (will) be engaging further with key shareholders of CMC Holdings Limited to implement the appointment of an interim caretaker board for a period to be determined,” a statement signed by CMA chairman Kung’u Gatabaki read.
The Capital Markets Authority will nominate the board’s representatives who will be independent individuals and who will be charged with the mandate of ensuring effective public interest oversight in the interim period.
The remaining two third of directors will be drawn from the current shareholders, Gatabaki added.
The decision was informed by preliminary findings that showed that the previous board exercised poor oversight in the running of the company.
In the forensic investigation report compiled by the firm of Webber Wentzel, the audit unearthed breaches of capital markets laws, weak internal controls, questionable procurement procedures and irregular establishment and operation of offshore accounts as some of problems ailing the auto dealer.
“The Board of CMC was availed copies of the Executive Summary of the preliminary forensic investigations report in order to give them an opportunity to familiarise themselves with the details of the preliminary findings,” the chairman added while presenting the findings.
CMC has been in the news since September 2011 when supremacy battles and fraud claims came to the fore and led to the suspension of the firm’s shares from trading at the Nairobi Securities Exchange.
At the centre of the dispute was logistics company Andy Forwarders Services which was founded by the immediate former CMC Chairman Peter Muthoka which was said to be overcharging the motor dealer for its services.
That conflict of interest saw CMC lose between Sh1.5 billion and Sh2billion in the last five years.
This situation as well as the existence of an offshore account with about Sh240 million stashed there, was called out by current Chief Executive Officer Bill Lay and subsequently led to the ouster of Muthoka and his immediate replacement by Joe Kibe as chairman of CMC Holdings.
What followed were accusations and counter accusations which have all played out in the public eye.
While maintaining that the primary objective of the measures CMA had undertaken was to safeguard the shareholders’ interests, Gatabaki disclosed that they would announce regulatory sanctions and enforcement measures to be taken against the company at a later date.