The 48 shareholders, including foreign investors who control 20.9 per cent of Chase Bank, are seeking access to a due diligence report prepared by KPMG and a Deloitte forensic audit report.
German investment firm DEG, French private equity fund Amethis Finance and Swiss venture capital firm ResponsAbility are some of the top owners of Chase Bank.
The CBK last week invited investors to submit bids to acquire an unknown stake in Chase Bank, a move that will dilute the current owners.
Troubled Chase Bank shareholders have written a protest letter to the Central Bank of Kenya (CBK) asking to be part of ongoing negotiations to sell some of the bank’s shares to a deep-pocketed investor.
The 48 shareholders, including foreign investors who control 20.9 per cent of Chase Bank, are through their lawyer, seeking access to a due diligence report prepared by KPMG and a Deloitte forensic audit report in order to determine the capital adequacy position of the troubled financier.
“Our position is that a deal cannot be done without the shareholders being part of the process. The bank belongs to the shareholders.
"CBK/KDIC have no right to sell the bank’s shares as that would amount to expropriation,” said Sonal Sejpal of Anjarwalla & Khanna.
Top owners
German investment firm DEG, French private equity fund Amethis Finance and Swiss venture capital firm ResponsAbility are some of the top owners of Chase Bank.
The shareholders reckon that the CBK has several times refused to provide information they need to determine the financial position of bank.
“Shareholders have asked for this several times. We don’t have this information. Our position is that we have to access the info whether we put in a bid or not. We have written to CBK to have this clarified,” said Ms Sejpal.
The CBK last week invited investors to submit bids to acquire an unknown stake in Chase Bank, a move that will dilute the current owners.
The CBK also extended Chase Bank’s receivership period for another six months ending October 7.
'Frustrating' process
“What is frustrating is that this process could have been started months ago,” Ms Sejpal said, adding that shareholders “would exercise their legal rights if denied access to the information.”
Zafrullah Khan, the ousted chairman of Chase Bank, and suspended managing director Duncan Kabui, were named as key architects of a scheme that systematically looted Sh11 billion from the bank.
Finance manager Makarios Agumbi and James Mwaura (credit manager) were also named as part of the discreet scheme that enabled cash to be siphoned from Chase Bank disguised as Islamic lending contracts.
Patrick Njoroge, the CBK governor, had at the time of the collapse warned that “firm action would be taken against those who have abused their fiduciary duties of managing our financial institutions.”
Dr Njoroge was yet to respond to our queries by the time this story was published.
The CBK put Chase Bank under receivership on April 7 last year, owing to liquidity problems attributed to a run on the bank from panicked depositors after Deloitte republished the lender’s results to report a surprise loss and massive insider borrowing – which led to the firing of Mr Khan and Mr Kabui.
No prosecution
To date, no Chase Bank official has been prosecuted for their alleged role in events that led to the bank’s collapse.
That marked the beginning of pain for depositors, who still have their cash stuck with the financier, and were only allowed to access a maximum of Sh1 million when the bank reopened on April 27, 2016 under KCB as receiver manager.
KCB #ticker:KCB Thursday refused to disclose if it was still interested in acquiring Chase Bank nor how much it had earned in management fees at the troubled financier.
“We cannot comment on a matter that is before the regulator,” KCB said in response to questions on the matter.
A forensic report by Deloitte — who were Chase Bank’s auditors for more than 20 years — revealed that Mr Khan and Mr Kabui were drawing funds from the lender and directing them to entities they co-owned.
These funds were then used to buy prime real estate and to construct properties in Nairobi and abroad, a report tabled in the National Assembly said.
The CBK reported it had forcefully seized properties worth Sh7.9 billion camouflaged as Islamic joint ventures by Mr Khan and Mr Kabui, and charged them to the bank, paving the way for the re-opening of Chase Bank after a three-week closure.
Prime assets
The prime assets confiscated included the Watermark Business Park in Karen, a car park at Chase Bank’s headquarters on Riverside Drive, 240 acres of land on Mombasa Road, a three-acre plot next to the German Embassy on Riverside Drive, and various posh properties in Dubai.
“These companies are owned by the chairman, over 90 per cent of the ownership of those companies was the chairman and 10 per cent was the group MD,” Fredrick Aloo, a partner at Deloitte & Touche in charge of auditing Chase Bank’s accounts, told Parliament last year.
“There was no single documentation to show how the money was advanced from the bank to purchase those properties.”
The Deloitte report said a further Sh3.1 billion was stolen from Chase Bank, saying that Mr Khan had pointed a finger at Mr Agumbi and Mr Mwaura.
However, Deloitte said it strongly believed that it was Mr Khan who carried out the heist.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
