Tobiko takes on Kiereini and Njonjo over loss of CMC funds

Three former directors of troubled motor dealer CMC risk criminal charges over the loss of millions of shillings in secret off-shore accounts.  

Director of Public Prosecutions Keriako Tobiko on Monday told the Business Daily that his office was investigating the alleged fraudulent transactions with a view to preferring criminal charges against the suspects.

Mr Tobiko said his office has been in regular contact with the Capital Markets Authority (CMA) in its assessment of the culpability of CMC board members adversely mentioned in a forensic audit report published earlier this year. 

Webber Wentzel, the South African audit firm that the CMA hired to investigate the affairs of the motor company found a number of directors criminally liable for the funnelling of millions of CMC funds into foreign accounts in Jersey Island.

“CMA made a request to my office to investigate the affairs of the company particularly the status of the offshore accounts allegedly used to divert funds from the motor dealer. We consequently have been probing the Jersey and South African accounts,” said Mr Tobiko.
Webber Wentzel named five CMC directors as having been involved in the funnelling of the company’s funds into off-shore accounts.

The directors are former long-serving chairmen Jack Benzima and Jeremiah Kiereini, former CEO Martin Forster and former directors Charles Njonjo and PK Jani whose names appeared in the report as having participated in the conception and execution of the scheme.

Mr Benzima and Mr Jani have since passed on leaving Mr Kiereini, Mr Njonjo and Mr Forster as the only candidates likely to face legal action in the matter. 

Mr Tobiko, however, said that the files of the three directors, who together with four others were last Friday banned from sitting in the boards of listed companies, had not been forwarded to his office for legal action but promised to act decisively  “once they land on my table.”

“Once we receive instructions, we will pursue the matter to conclusion,” said the DPP in response to questions on the alleged fraud.

On Friday, CMA chairman Kung’u Gatabaki announced that the former Attorney-General Charles Njonjo alongside six CMC directors have been barred from holding directorships in companies listed on the Nairobi Securities Exchange (NSE).

Mr Gatabaki said the embattled directors who serve in various companies’ boards, had betrayed shareholder interests and could, therefore, not be trusted to sit on any other boards.

He said the ban was imposed after three different investigations found the board members to have been implicated in fraud, directly or otherwise, that had cost the motor dealer billions of shillings.

The list of banned former directors includes former chairman Peter Muthoka,  Richard Kemoli, Andrew Hamilton and Sobakchand Shah - the company’s former finance director.

CMA actions follow the recommendations of the ad hoc committee it appointed to review matters raised in the Webber Wentzel report.
The committee was headed by former anti-corruption commission director Aaron Ringera.

Mr Gatabaki also announced that CMC shares will remain suspended from the bourse until investigations into the alleged fraud are complete.
“CMA board feels that it is the right time to protect the share price and essentially, investor interests,” he said in a statement.