Imperial Bank Limited.

Directors of Imperial Bank have blamed Central Bank of Kenya (CBK) for failing to prevent the loss of Ksh42.2 billion. The non-executive directors filed an application at the High Court seeking to have the CBK’s quest to freeze their assets struck out on the grounds that it does not disclose any wrongdoing from their side.

Alnashir Popat, Anwar Hajee, Jinit Shah, Hanif Mohammed Amiralisomji, Mukesh Kumar Patel, Vishnu Dhutia, Eric Gitonga, Omurembe Iyadi, Christopher Angelo Diaz denied they were responsible for the loss of Ksh42.2 billion from the bank.

In September 2016, CBK sued the directors of the troubled Imperial Bank, seeking to freeze assets worth Ksh42 billion held in more than 40 companies. It also sought to compel the directors and shareholders to pay back Ksh2.7 billion, allegedly given to them fraudulently as dividends. The CBK, Imperial Bank and Kenya Deposit Insurance Corporation went after the directors of the bank on grounds they engaged in fraud and breached the fiduciary duty to depositors.

But the directors said during the time of the alleged fraud, all the top managers were appointed according to their qualifications. Through lawyer Coulson Harney, they said that there is no evidence linking them to the loss. They termed the allegations as malicious since Imperial Bank had sued the persons it suspected to have been responsible for the fraudulent activities.

They argue that the FTI report of October 12, 2015 revealed that the fraud was perpetrated by the former Group Managing Director Abdulmalek Janmohamed in conjunction with various senior employees together with servants and agents of CBK.

They added that the bank was regularly audited by CBK and consistently given a clean bill on all aspects including the bank’s management. They denied the allegations that they fraudulently recommended the payment of dividends. “We deny the allegations that the board presented falsified financial reports to the public with the knowledge that they did not reflect the true financial position of Imperial Bank,” said Harney.

The FTI report indicated that the beneficiaries of the fraud were W.E Tilly, Jade Petroleum, Adra International Limited and other companies belonging to Abdulmalek Janmohamed. The board claimed to have acted in the manner expected of it in the circumstances and also denied breaching banking Act.

In court documents, the directors said that CBK failed to discharge its mandate under the banking Act by failing to foster proper functioning of a stable market based financial system. CBK failed to exercise a tight grip on advances, loans and credit issued by the bank, they say.

They added that CBK failed to protect the bank from engaging in risky investments that resulted in putting depositor’s fund at risk. “CBK did not follow up or set up a verifiable compliance mechanism but instead colluded with Imperial Bank’s top management to conceal the Bank’s true position with the management,” they said.

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In their witness statements, the directors added that CBK violated the banking Act by failing to use the right channels to access any information from the bank’s auditors that would have helped to reveal the true financial position. “The bank also violated section 34 in failing to intervene in management at the earliest point where it ought to have discovered that the bank was under-capitalized,” they said.

The court was told forensic investigations conducted by FTI consulting revealed multiple breaches of fiduciary duty by directors, leading to massive and well-orchestrated fraud which resulted in loss of Ksh42 billion assets and depositors’ funds. The matter will be heard on March 17th this year.




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