Dr Patrick Njoroge
Central Bank of Kenya Governor Dr Patrick Njoroge says the bank's directors have been cooperative.

Chase Bank was reopened in record time after Ksh8 billion that had been allegedly lent out to directors irregularly was recovered in three weeks. Central Bank of Kenya Governor Patrick Njoroge says the directors hid behind the veil of Islamic banking to award themselves interest-free loans that exceeded the CBK prudential guidelines limit.

CBK allows banks to lend not more than 25 per cent of their core capital to directors. But earlier this month, two Chase Bank directors told detectives from Directorate of C******l Investigation that their auditors, Deloitte, had misunderstood Islamic finance principles which led to reporting of financing contracts in the bank as loans to directors.

Dr Njoroge blamed the previous administration of Central Bank for the mess in the banking sector, saying it failed to enforce the sector’s prudential guidelines.

The governor, who was responding to a question on why he had allowed Chase Bank to resume business after just three weeks yet Imperial Bank is still closed, said the shareholders of the former, which returned to business under the management of KCB had been cooperative compared to those of Imperial Bank, which was closed and placed under receivership in October last year.

See Also: Chase Bank reopens but imposes limits on withdrawals

Her said Imperial Bank shareholders were not cooperative, citing the fact that they had failed to raise Ksh10 billion, one of conditions CBK’s had given them before it is allowed to reopen. “We have been able to reopen Chase because the shareholders have been co-operative,” he said.

Dr Njoroge claimed he had challenged Imperial Bank shareholders to raise the Ksh10 billion when they reported the Sh30 billion f***d that had been orchestrated by the bank’s late managing director Abdulmalek Janmohammed. But the governor’s explanation differs fundamentally from that of Imperial Bank shareholders who say the Ksh10 billion capitalisation of the bank came from them as part of the recovery plan they had developed with the help of their contracted forensic auditor who unearthed how the f***d on the bank was orchestrated.

“The Imperial Bank matter is very complex but we will get to the bottom of it,” he said. Imperial Bank shareholders went to court earlier this year challenging the way CBK has handled their bank’s receivership since it was closed. Imperial Bank’s big depositors such as Kenya Tea Development Agency and other individual savers have also sought to be enjoined in the case against CBK. (People Daily)

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