Money Markets

Shareholders demand CMC fraud probe report

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Peter Muthoka, the ousted CMC board chair and CEO, Andy Forwarders. Photo/FILE

Peter Muthoka, the ousted CMC board chair and CEO, Andy Forwarders. Photo/FILE 

By BENSON WAMBUGU

Posted  Tuesday, November 22  2011 at  20:20

Minority shareholders of troubled motor dealer CMC want the capital markets regulator to file the forensic audit report on alleged fraudulent transactions at the company with the court.

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This will provide them with reliable information on fraud allegations at the company, the investors said in a court application that, if granted, could set a precedent on shareholders’ access to investigative reports by the regulator.

The shareholders, with a combined stake of about 32.41 per cent of CMC shares, told the court on Tuesday the report should be made available to them in advance to help them make an informed decision on the company’s financial position and its leadership.

The minority shareholders argued that the current situation has seen CMC’s shares get suspended from trading by the Capital Markets Authority (CMA).

“This has adversely affected our rights to trade or deal with the shares,” said the shareholders, adding that they were apprehensive that unless the court intervened and arrest the present wrangles the firm was likely to lose its exclusive agency and franchise rights.

Four shareholders including Mansuklal Chotai and Vincent Muriithi filed the application.

They said the serious allegations made against a section of the majority shareholders have caused them and the investing public great anxiety.

CMC imports more than 2,000 units of its a wide range of vehicle brands, including saloon cars, heavy commercial trucks and tractors every year.

The single largest shareholder of the company, Andy Forwarders, had petitioned for an extra-ordinary general meeting (EGM) whose agenda was to kick out some directors of the company.

The court, however, blocked the meeting, until a petition filed by Andy against CMA’s opposition to the meeting is heard and determined.

The Andy Forwarders’ chief executive, Peter Muthoka, assured the court yesterday that the company was not planning to hold any extra-ordinary general meeting since it was blocked by the court last week.

In an advertisement in the local dailies published on Monday last week, Andy Forwarders had indicated that although the EGM had been stopped by the court, preparations of the meeting were on going.

The minority shareholders wanted an assurance saying that there was confusion as to whether the meeting would go on.

Lawyer Fred Ojiambo, acting for Andy Forwarders, however, said the EGM was has since been stopped.

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