CBK WAS DEEPLY INVOLVED IN IMPERIAL FRAUD, FORMER DIRECTORS ALLEGE.

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Lawyer Josephine Kongweno (left) speaking with the Chairman of the Imperial Bank limited Depositors Lobby Group Mahmood Khambiye (right) and a member of the group Shaileen Parmah outside the courtroom at Milimani law court on Tuesday October 5, 2016.

BY SAM ALFAN.

Eight former directors of Imperial Bank have now accused Central Bank of Kenya officials of being deeply involved in the facilitation of fraudulent and irregular disbursements made from the bank.

Through the replying affidavit by one of the director Mukesh Kumar Patel, claims that CBK knew and participated from the fraud. The director further alleges that CBK was involved in the manipulation of the bank’s schedules.

The  directors claim that  Imperial bank’s group managing director Abdulmalek who passed on  September15 2016 maintained an inappropriate relationship with CBK’s former  governor  Professor
Njuguna  .saying such relationship was a collusion and corruption meted on the bank arguing that  there are emails communication  to the  effect.

In the affidavit, Patel has named former CBK governor Prof. Njunguna Ndungu together with his wife, Ronald Geoffrey Langat, Reuben Cheres and Peter Gatere as central bank staff who benefited from the fraud.

Patel alleges that CBK and KDIC are motivated to liquidate the bank for their own benefit adding that the two entities are not sincere with depositors in regards to their recovery narrative.

“Indeed, the relationship was one of collusion and corruption and there are emails confirming without doubt that the former Governor of the CBK was compromised by the Former Group Managing Director through improper gifts extended to him,” said Patel in court documents.

Imperial Bank Limited, Kenya Deposit Insurance Corporation and Central Bank of Kenya moved to court two weeks ago seeking to recover 42.4 billion shillings from the directors.

They allege CBK  rushed to the  transfer and exclusion – liquidation  process having not exhausted all restructuring options KDIC’s refusal refused to allow for proper due diligence that would inform a sustainable recapitalization of the bank.

They claim CBK has turned away any proposal from 3rd parties wishing to acquire the bank *not in the affidavit but let’s see if we can get away with throwing it in Spending depositors money on professional services that are not about KDIC and CBK and not sincere with depositors in regards to their recovery narrative

The bank accused the directors of awarding themselves Sh2.7 billion in dividends despite knowing the bank’s true financial standing.

Imperial Bank sought orders to freeze the shares that the directors own in the 42 companies linked to them.

According to the bank, forensic investigations conducted by FTI consulting firm over the financial irregularities at the bank revealed multiple breaches of financial duty on the part of the directors leading to massive loss.

However in reply to the suit, the directors now dispute the report claiming that the bank has not produced the said report by FTI consulting firm in court.

“It is irresponsible for the Receiver of the Bank to swear an affidavit alleging fraud and negligence by the Bank’s Board, in the absence of any material placed before the court in that regard, or such finding by any court of law,” said the director.

The directors argue that the suit is in bad faith as there is no evidence to show that they participated or contributed in the fraud

In court documents, the Directors explain that following Janmohamed demise, Naeem Shah (formerly the Bank’s Head of Credit) and James Kaburu (formerly the Bank’s Chief Finance Officer) were appointed on 16th September 2015 as Acting Managing Director and Deputy Managing Director of the Bank, respectively.

Upon their appointment, the two informed one of the former directors, Alnashir Popat that the deceased had on numerous occasions initiated and authorized irregular disbursements of vast amounts of money belonging to the Bank, which disbursements were concealed from the Board.

The two reported that they had been coerced by the Former GMD into effecting these illegal instructions and that the Former GMD had threatened to “destroy” them if they did not cooperate.

The appointment of the independent external forensic advisors was considered and FTI Consulting, a firm of reputable international forensic investigators, was contacted on the same day to conduct the audit.

The FTI Preliminary Report confirmed that the Former GMD had been running a scheme of fraudulent and illegal disbursements with certain accomplices, within and outside the Bank, without the knowledge or consent of the Board.

The directors said that the issued was forwarded to CBK and the bank placed under receivership.

However the directors accuse CBK of failing in its statutory obligations and negligence in its execution.

 

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