Reprieve for Muthoka after CMA reduces ban from boards to 5 years

Former CMC Motors director Peter Muthoka can return to the boardroom of a listed company in one year’s time after the Capital Markets Authority (CMA) reduced the period he was disqualified from directorship of listed firms to five years.

Mr Muthoka, a former chairman of the auto firm, and close associate Joseph Kivai had filed a petition against the CMA’s August 2012 decision that barred them from the CMC board and further imposed a lifetime ban from listed firms’ boards for Mr Muthoka in the wake of a string of management and financial irregularities at the motor dealer.

CMC has since the ban been taken over by Dubai firm Al Futtaim in a Sh7.5 billion deal, and de-listed from the Nairobi Securities Exchange. Mr Muthoka was the biggest beneficiary of the buyout, earning Sh1.8 billion for his 24.7 per cent stake in the auto dealer.

“Following the review of the petition filed by Mr Muthoka and Mr Kivai, the CMA board determined that the disqualifications relating to CMC Holdings had lapsed following the de-listing of the company, and resolved to review the lifetime disqualification for Mr Muthoka to five years, effective August 3, 2012 to August 3, 2017,” said the CMA in a statement announcing the review.

“In arriving at its decision, the CMA board considered the grounds of the petition and submissions made, including the fact that neither petitioner had been involved in the maintenance of fraudulent offshore accounts drawn from shareholder funds.”

In their petition, Mr Muthoka and Mr Kivai had asked the CMA board to either set aside, lift and/or substitute the lifetime ban.

READ: CMC buyout ends as Al-Futtaim pays owners Sh7.5bn

Other than Mr Muthoka, six other directors of CMC were hit by the life ban, including former Attorney General Charles Njonjo, former head of civil service Jeremiah Kiereini, businessman Richard Kemoli, former long-serving CMC managing director Martin Forster, former CMC finance director Sobakchand Shah and Andrew Hamilton.

Reports by audit firm PricewaterhouseCoopers, Webber Wentzel and an ad hoc committee led by Justice Aaron Ringera found the directors failed in their duty of protecting CMC shareholder interests.

The effect of the ban was felt beyond the CMC boardroom, given that some of the directors were holding similar positions in multiple listed firms.

For instance, Mr Kemoli was at the time serving as a director of Bamburi, Unga Group, East African Breweries Limited and Kakuzi.