Imperial Bank customers outside the Mombasa branch read a notice of its closure posted on the gate on October 13, 2015. PHOTO | FILE
What you need to know:
Naeem Shah reckons that Imperial Bank directors and Central Bank of Kenya officials were part of a Sh34 billion fraud scheme and were merely implicating him to cover their tracks.
Imperial Bank has sued Mr Shah, his deputy James Kaburu, the family of Mr Janmohammed and 20 other individuals and firms, seeking to recover Sh34.9 billion it claims was lost in the fraudulent scheme.
The lender insists that the accused either helped Mr Janmohammed or benefited from proceeds of his illicit scheme.
A former Imperial Bank manager has denied claims that he blew the whistle on a Sh34 billion fraud scheme that its long-serving chief executive Abdulmalek Janmohammed run for 13 years before his death in September.
Naeem Shah, who temporarily succeeded Mr Janmohammed as group managing director, says in papers he has filed in response to a suit that receiver managers have file against him that he never made any confessions on his alleged role in helping his boss embezzle depositors’ funds.
Instead, Mr Shah reckons that Imperial Bank directors and Central Bank of Kenya (CBK) officials were part of the fraud scheme and were merely implicating him to cover their tracks.
“Mr Shah has never disclosed any such information to members of Imperial Bank’s Board of Directors. The suit herein is a cover-up between Imperial Bank’s directors and the Central Bank of Kenya. It is the Board of Directors that controls affairs of the company and not employees,” Mr Shah’s lawyers said in a replying affidavit.
Imperial Bank has sued Mr Shah, his deputy James Kaburu, the family of Mr Janmohammed and 20 other individuals and firms, seeking to recover Sh34.9 billion it claims was lost in the fraudulent scheme. The lender insists that the accused either helped Mr Janmohammed or benefited from proceeds of his illicit scheme.
Imperial Bank claimed in suit papers it filed in court that Mr Shah and Mr Kaburu had told a section of the board of directors about the scam he had been running since 2002, adding that an audit had determined that Sh34 billion had been lost.
The bank moved to court through its receiver manager, the Kenya Deposit Insurance Corporation, where it filed two cases, one against Mr Janmohammed’s family and the other against 20 companies and individuals believed to have collaborated with him to siphon money out of the bank.
Imperial Bank became the second lender after Dubai Bank to go into receivership since Patrick Njoroge took charge as CBK governor in July.
The bank has obtained a court order freezing the assets of all the individuals and companies sued to recover the Sh34 billion, including Mr Shah who now says he wants the entire suit dismissed.
Mr Shah says that an audit the lender claims to have carried out was done with scanty and partial information as part of the cover-up, which is intended to fix him as the fall guy in the entire scandal.
The bank said it had hired US-based FTI Consulting to carry out the forensic audit, which placed the embezzled figure at Sh34.9 billion.
“If any such audit was conducted, it was brought with the sole purpose of creating imaginary villains and offering Mr Shah as a sacrificial lamb whereas Imperial Bank’s directors walk away scot-free. Imperial Bank has itself admitted to using partially conducted audits to institute the claim, which is a clear indication that it is on a warpath against Mr Shah,” his lawyers added.
Imperial Bank had also alleged that Mr Shah helped cook books of accounts to hide the mega fraud scheme, but the former manager now says the Board of Directors is entirely responsible for approving financial records hence should be held responsible for any irregularities.
Court documents filed by Imperial Bank show that W. E. Tilley — one of the companies implicated in the scam — would receive bulk payments in a US dollar account.
W.E. Tilley would then transfer the funds to another account in the bank where the dollars would be converted into Kenya shillings.
The money would then be wired to secret accounts that Imperial Bank insists were controlled by Mr Janmohammed, Mr Shah and other senior managers in instalments of between Sh10 million and Sh100 million every week.
But Mr Shah denies ever having control of the secret accounts, and says the bank has not shown any link between him and W. E. Tilley or Hanscombe Management Limited, another secret account.
“Mr Shah had no powers or authority and did not have the capacity to undertake any of the activities that he is alleged to have undertaken. Financial statements are approved and published at the behest of the board of directors and consequently the purported irregularities lie at the feet of the Board,” Mr Shah’s lawyer, Ahmednasir Abdullahi, holds.
The CBK had in October hinted that the troubled lender may reopen soon, but delays have seen the regulator and Imperial Bank play a blame game over commitment to the recovery plan they mapped out together.
The regulator has accused Imperial Bank’s shareholders of not being fully committed to the recovery plan, while the shareholders insist that the CBK is not following up on proposals they made to have the bank reopened.
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