Central Bank of Kenya (CBK) officials have been accused of forging inspection reports and doctoring board papers with the help of Imperial Bank management in a case seeking to unravel how the bank became insolvent, forcing it into receivership. Imperial Bank shareholders and directors say CBK colluded with the former Managing Director and other senior officials including James Kaburu and Naeem Shaah to provide the board with false financial data together with doctored regulatory reports, which saw the bank lose Ksh35 billion.
The non-executive directors and shareholders claim that the move was to hide the fraud and the true position of the bank’s balance sheet from the board. In an affidavit by one of the non- executive directors, Mr Anwar Hajee, the shareholders state that deposits were fraudulently transferred to various accounts under the name of W.E. Tilley (Muthaiga) Limited. “The disbursements were effected on the instructions of the bank’s deceased former Group Managing Director Abdulmalek Janmohammed and with the assistance of other senior officials of the bank and their associates,” claimed Hajee in court documents.
The shareholders and the directors further claim that the monies would be withdrawn or transferred for the benefit of those concerned but CBK officials facilitated the concealment of the fraudulent transactions. “The improper relationships appear to have been those between Mr Kaburu the Chief Finance Officer and latterly Deputy Managing Directors at IBL and Mr Gatere and Mr Cheres from CBK. They were all intimately involved in the inspection process as well as the general , day to day running and regulations of the bank,” claimed Hajee.
The shareholders claim that CBK over the course of the year and unknown to the IBL Board acted in disregard of the law in relation to the supervisory processes. “A reasonable regulator in the shoes of the CBK should have brought to light the wrong doing at the highest level of IBL’s management. CBK did not do this,” state the shareholders in court documents.
The shareholders say CBK officials established a pattern of hiding loans from the board of directors.
Additionally, non-performing loans were not correctly re-classified and provided for in the IBL’s accounts as well as overdraft lending, which went beyond the limits. It is their claim that CBK is pursuing them to conceal its own involvement in the former MD’s fraud. According to shareholders, they operated on the basis that CBK inspection team and IBL management were both honest and straightforward in their dealings.
“The directors believed and had no reason to doubt that the Bank’s executive team and CBK had a professional and above board relationship,” said Hajee in court documents.
- Aggregate amount by top 50 borrowers reduced by two thirds
- IBL Staff to CBK Inspection team – Ksh14.29bn
- CBK approved amounts to IBL board member (Revised numbers after deletions and doctoring) Ksh5.34bn
- 23 companies omitted from the original list to develop a revised list, hiding the true health of the bank from the directors nominated by the shareholders to the board.
- Of the 27 companies appearing on both the CBK and the IBL Board PR 4-5s, the IBL Board saw an aggregate account balance reduced by Ksh2.19bn
- Aggregate amount by top 50 borrowers reduced by half
- IBL Staff to CBK Inspection team –Ksh14.59bn
- CBK approved amounts to IBL board member (Revised numbers after deletions and doctoring) Ksh7.4bn
- 14 companies omitted from the original list to develop a revised list, hiding the true health of the bank from the directors nominated by the shareholders to the board.
- Of the 36 companies appearing on both the CBK and the IBL Board PR 4-5s, the IBL Board saw an aggregate account balance reduced by Ksh.2.66bn
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