Kenya’s Capital Markets Authority (CMA) commenced its enforcement proceedings against former board members of Imperial Bank Limited (IBL) over oversight failure.
In a statement, CMA said that the board members failed “to provide oversight in the preparation, approval and publication of the Information Memorandum for a Ksh2 billion medium-term note issue and on their failure to report the financial statements fraud to CMA and the investing public when it came to their knowledge on 21 September 2015, a day before the bond was allotted to the bondholders.”
Efforts by CMA to undertake the IBL bond enforcement proceedings had been delayed by the former IBL directors who filed court proceedings in 2016 in the High Court and which culminated in Supreme Court Petition no. 29 of 2019 Alnashir Popat & 8 Others vs Capital Markets Authority.
CMA discloses that Imperial Bank applied to issue a KSh2 billion corporate bond on 30 April 2015 and the capital markets regulator approved the issuance on 12 August 2015.
The bond offer period opened on 24 August 2015 and closed on 17 September 2015.
However, following the sudden death of the Imperial Bank Group Managing Director, Mr Abdulmalek Janmohamed on 15 September 2015, the bank’s management on 21 September 2015 informed the board chairman and some directors about an alleged financial statement fraud conducted by the late Group Managing Director and some top bank officials since 2006.
The former board chair Alnasir Popat and other directors Omurembe Iyadi, Jinit Shah, Anwar Hajee, Mukesh Patel, Eric Bengi, Vishnu Dhutia, and Hanif Somji failed to act on the crucial information and allowed the bond issuance to proceed.