Markets regulator, Capital Markets Authority (CMA) has imposed a total fine of KSh15 million on four former Real People, a non-deposit taking financial solutions provider for businesses in East Africa, for flouting regulatory norms.
According to CMA, the four, Mr Arthur Arnold, Mr Neil Grobbelaar, Mr Arumugam Padachie and Mr Bruce Schenk diverted proceeds of the KSh1.3 billion bond to South Africa.
“CMA initiated an investigation into the matter and noted that there appeared to have been a plan involving RPKL (Real People Kenya Limited) and RPIHL (Real People Holding International Limited), South Africa to use the medium-term note proceeds to settle an intercompany loan even before the application, approval, and issue of the medium-term note,” CMA said in a statement.
Mr Arthur Arnold, the RPKL Board Chairman at the material time, has been fined Ksh 5 million. Mr Neil Grobbelaar, an RPKL Board Member and Chief Executive Officer of RPHIL at the material time who has been fined KES 5 million. Mr Arumugam Padachie, RPIHL Board Member and Group Chief Finance Officer at the material time has been fined Ksh2.5 million.
Mr Bruce Schenk, the alternate director to Neil Grobbelaar on RPKL board and Executive Director of RHIPL at the material time who has been fined Ksh2.5 million.
The four have been disqualified from being directors or key personnels of any issuer, licensed or approved person in the Kenyan capital market.
In 2015, CMA had approved a Ksh 5 billion MTN Programme to be issued by RPKL.
The first tranche issue of Ksh 2.5 billion raised Ksh 1.6 billion. Immediately thereafter, RPKL started experiencing financial distress and had been unable to meet its MTN obligations leading to extension of redemption dates beyond the initial maturity dates of 6 August 2018 and 3 August 2020, for the 3-year and 5-year Notes, respectively.