CBK ordered to file response in Mweni fake bonds case
Fred Mweni addresses a press conference after his ban by the Capital Markets Authority. FILE
The High Court has given the Central Bank of Kenya three weeks to respond to claims made by Mr Fred Mweni, a bonds trader who was blacklisted last year by the capital markets regulator.
Mr Mweni in May this year claimed that CBK employees hatched an elaborate scheme to create and trade fake bonds in which the Treasury may have lost up to Sh2.6 billion. This prompted CBK to apply to be enjoined in the suit as an interested.
The claim was made as part of an affidavit filed in support of a case in which Mr Mweni is challenging the decision by the Capital Markets Authority (CMA) to suspend him from holding directorship in any listed company or any market intermediary.
“The (interested party should) put in a response together with submissions within 21 days from today. Mention on February 3, 2014 for taking of hearing date,” directed Justice Weldon Korir.
The bonds dealer was suspended from holding any directorship position on December 21 after allegedly failing to respond to summons by the regulator. Mr Mweni moved to High Court shortly seeking to quash the CMA decision.
But CBK’s attention was attracted by Mr Mweni’s claim that its staff may have connived with stockbrokers and investment bankers to steal the government securities in a multi-billion shilling scam.
Mr Mweni later withdrew the document containing the claims against the CBK shortly after it had applied to be enjoined in the suit.
CBK, while seeking to be enjoined in the suit, termed Mr Mweni’s claims “serious and spurious” allegations.
Mr Kennedy Abuga, a CBK director, said in an affidavit that if left unchallenged may be taken as indicative of the truth and can damage the reputation of CBK irreparably.
Mr Mweni has three cases pitting him against CBK arising from the bonds scandal. He is already battling a criminal case at the magistrate’s court in which his brother Bokole Mweni is facing a charge of handling stolen bonds.
CMA claims that Mr Mweni handled three fake treasury bonds worth Sh18.5 million, Sh9.5 million and Sh11.5 million.
But Mr Mweni, in his latest affidavit, says the scam is more elaborate and involved more firms, adding that CMA discriminated against him when it suspended him and left out other brokers and investors involved in the scam.
The list of stockbrokers and investors named in the court document to have handled the fake bonds includes Kestrel Capital, Apex Africa Capital, Kingdom Securities and Afrika Investment Bank.
Responding to the allegations, CMA said that it was investigating more firms regarding the scandal without giving further details on the value and extent of the investigations.
Mr Bokole Mweni, together with Manline Communications director Moses Muregi, faces criminal charges at the magistrate’s court alongside a CBK employee accused of creating the fake bonds.
Manline Communications is accused of involvement in the sale of separate Sh105 million worth of fake bonds.
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