With just days to the end of the year, a dark cloud still hangs over Imperial Bank. While a forensic report shows those believed to have perpetuated a scheme of fraud that led to the collapse of the bank, the authorities are feet-dragging in what is feared could let fraudsters off the hook and at best with a slap on the wrist.
The Central Bank of Kenya (CBK), which is supposed to safeguard interests of bank shareholders and defaulters, has been going to great lengths to conceal its tracks in the Imperial Bank fraud. Court documents and the CBK governor’s contradictory remarks reveal an elaborate scheme that started immediately Imperial Bank directors, armed with a forensic audit report they had commissioned, reported the fraud to the regulator in October 2015.
CBK, it seems, is determined to liquidate the bank, a move that could bury the allegations against the regulator’s staff and Imperial Bank managers and dim any hopes of bringing to book the culprits in the Ksh35 billion, one of the biggest corporate frauds in Kenya. It started with the appointment of Peter Gatere as Imperial Bank’s first receiver manager.
Mr Gatere, who was a banking supervision official, is among top CBK officials adversely mentioned in the forensic audit conducted by US based audit firm, FTI Consulting, soon after the death of Abdulmalek Janmohamed and the consequent collapse of Imperial Bank, the once-bubbly mid-tier bank serving mostly high networth individuals.
Mr Gatere’s name features in email correspondence unearthed by FTI Consulting with former Imperial Bank Chief Finance Officer James Kaburu in a conversation that suggests they alerted each other whenever a whistleblower sent an email to CBK on the fraud. The emails were shared privately between Kaburu and Gatere, according to investigations by FTI Consulting.
“This private correspondence of such serious and damning allegations confirms beyond doubt that the fraud perpetrated at the bank was a direct result of the collusion between officers at CBK and senior managers at the bank,” says Mr Mukesh Shah in a replying affidavit in a case where Kenya Deposits Insurance Corporation (KDIC) is seeking to have the directors and shareholders’ assets frozen.
Once appointed, Mr Gatere moved quickly and appointed Kaburu as his deputy managing director. At the time, Mr Kaburu had already confessed to the directors of the bank that he had actively helped Janmohamed to execute the theft. He had also owned up to bribing CBK officials to help in covering up the fraud for10 years.
Both Gatere and Kaburu would later be replaced quietly from the bank with the former’s position going to Mohammud Ahmed. Mr Kaburu has been charged in court for the fraud together with Naeem Shah, who was head of credit.
Another senior official from CBK implicated is Assistant Director, Bank Supervision Matu Mugo. Peter Gatere, the first receiver manager, who was in supervision post-collapse, took bribes and asked for personal favours, helped to hide vital information. Reuben Cheres and Simon Gichuki are accused of coaching James Kaburu on how to delete borrowers’ data on the inspection reports and concealing vital data on bank’s state of affairs. Others are Medline N. Kihara, Daniel Thogo, Caroline Mwobobia and Ali A.M, Assistant Director for Supervision, who signed off on financial statements, as well as Simeon K. Rono, A. Migude and G. Langat, who took off book loans and bribes.
Many left scot-free
Curiously, no other Imperial Bank staff has been charged although the forensic report names a number of others who were part of the game. CBK, as it were, is also yet to charge its officers who have been mentioned in the forensic report as having colluded in the fraud.
FTI Consulting lists four other top officers who were part of the cover-up. Some of those mentioned did more than just cover up. For example, Reuben Cheres is reported in email conversations helping to sanitise the banks financial statements on instructions from Kaburu. “The highlighted in purple are the ones to be deleted. Classification of automotive solutions should change from doubtful to watch,” says Mr Kaburu in an email to Cheres accompanied by an attachment of banks financial statements for June 2014.
In his affidavit, Mukesh also names Cheres as one of the CBK officials who helped in fiddling with the banks statements. “It is worth noting that the officer at CBK who colluded to falsify the (bank’s) schedules is the same one who approved appointment of PKF as auditors,” he says.
The CBK staff mentioned in the affidavits include among others: Governor Patrick Njoroge and his deputy Sheila M’mbijiwe, both for mismanaging the recovery process. Former CBK Governor Njuguna Ndung’u has been fingered for having an inappropriate relationship with the group managing director, who paid for his holiday trip to a Thailand Spa & Resort and organized for his trip to Dubai.
IBL mentioned in the new evidence are:
- Abdulmalek Janmohamed – GMD
- Anne Mboya – PA to GMD
- Naeem Shah – Head of Credit – charged
- James Kaburu – CFO – charged
- Nina Shah- Head of Treasury – still employed
- Alisager Esmailjee – still employed, helping with receivership
- Robinson Boreh – still employed
- Peter Nzuki – still employed
- Mehboobha Shamji – still employed
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