Ex-KCB chief has case to answer in Uchumi shares row

Former Kenya Commercial Bank (KCB) managing director, Terry Davidson, and former Uchumi Supermarket general manager, Bernard Mwangi Kibaru, accused of insider trading in the shares of the retail chain, have a case to answer.

A Nairobi chief magistrate, Gilbert Mutembei, asked them to defend themselves against the accusations that they engaged in the irregular trading of Uchumi Supermarket shares.

Mr Davidson will be in the dock on May 24 while Mr Kibaru will follow on May 25.

The case against the two was brought by Capital Markets Authority (CMA).

The court ruling means that CMA has proved its case against the two and the burden is now on the accused to dismantle the court findings through their defence.

According to the charge, the former top banker is alleged to have instructed Suntra Investment Bank to buy for him 664,899 Uchumi shares worth about Sh9.5 million on December 2, 2005.

On May 9, 2006, Mr Davidson instructed the same stockbroker to sell 300,000 shares worth about Sh5 million, days before the retail chain collapsed under debts.

It is alleged the former KCB boss traded the shares based on information not within the public domain, contrary to CMA regulations.

Mr Davidson disposed his stake following information that the company was experiencing financial troubles. KCB had allegedly declined to offer financial assistance to rescue the firm from collapse.

Mr Kibaru was charged with two counts of irregular trading.

He is said to have instructed Drummond Investment Bank to dispose of 11,400 Uchumi shares on April 26, 2006, contrary to the CMA Act.

During the proceedings, former Uchumi company secretary Mr Waweru Mathenge testified that Kibaru was a signatory of the retail chain when he irregularly traded in its shares and was among the top 100 shareholders with access to key inside information on Uchumi.

According to Mr Mathenge’s testimony, the former general manager was privy to confidential information on the performance of the firm.

Mr Mathenge also said Mr Davidson was privy to the performance and financial position of the supermarket retail chain both as a shareholder and KCB chief executive and traded on the retail chain shares based on the information contrary to the CMA regulations.

KCB and PTA Bank had advanced Uchumi Sh956 million, making Mr Davidson privy to the financial status of the retail chain as the bank’s top ranking manager.