NAIROBI, Kenya August 3 — The Capital Markets Authority has taken enforcement action against three former Chase Bank Kenya Limited(CBKL) executives, five board members, and accountant Deloitte and Touche over their alleged role in the issuance of a Sh10 billion medium-term bond in 2015.
CMA has taken enforcement action against Duncan Kabui, the Chase bank Group Managing Director at the time, who has been fined Sh5 million and disqualified from being a director or key personnel of any issuer, licensed, or approved person in the Kenyan capital market for a period of ten years.
Former Chase bank CEO Paul Njaga has been fined Sh5 million while Ken Obimbo who was Group Finance Director at the material time has also been fined Sh5 million and disqualified from being a director or key personnel of any issuer, licensed, or approved person in the Kenyan capital market for a period of five years.
The regulator has also fined board members Anthony Gross, Laurent Demey, Muthoni Kuria and Rafiq Sharrif Sh2.5 million each for their role in the issuance and use of the bond.
Gross has also been directed to attend corporate governance training for a period of not less than five days.
Richard Carter a CBKL board member at the time has been fined Sh1 million.
Deloitte and Touche, the CBKL reporting accountant at the time has been fined Sh10 million.
Further, the Committee recommended that the conduct of the accounting partners during the respective audit periods be referred matters be taken up by ICPAK.
In 2015, CBKL sought approval from the Authority to issue a medium-term bond for Sh10 billion. The approval was granted and Sh4.8 billion was raised in the first tranche which was listed on 22 June 2015.
On April 7, 2016, the Central Bank appointed the Kenya Deposit Insurance Corporation (KDIC) as a receiver for CBKL for a period of twelve months after it went under. This led to the suspension of trading in the Chase Bank Bond on April 8, 2016.
Concerned by the developments at CBKL and in light of its investor protection mandate, the Authority commenced an inquiry in the matter to establish any possible Capital Markets regulatory infractions that might have led to the collapse of CBKL.
The Authority’s inquiry on the lender highlighted issues on the preparation of false and misleading financial statements, failure to disclose material information, and conflict of interest.
Following the conclusion of administrative hearings by a CMA Ad Hoc Committee, it was determined there was lack of effective oversight by the CBKL board members regarding the use of funds raised from the 2015 medium-term notes (MTN) issue.
The bank had intended to apply the funds to finance the expansion of its branch network, strengthen its capital base and invest in IT and product development.
