The Capital Markets Authority (CMA) has held that only its tribunal can absolve collapsed Imperial Bank directors of blame in the Sh2 billion bond that the lender issued in August last year, just two months before being placed under statutory management.
The capital markets regulator insists that its tribunal is the legally mandated body to hear and determine whether Imperial Bank’s directors were negligent in the run up to the lender’s floating of the Sh2 billion corporate bond.
Imperial Bank directors in June obtained court orders barring the CMA tribunal from proceeding with a notice to show cause why enforcement proceedings should not be commenced against them to recover funds raised during the collapsed lender’s cash call made on August 25 last year.
The directors insist that the bank’s former general managing director Abdulmalek Janmohamed and ex-chief finance officer James Kaburu were the only people involved in the run up to the cash call.
But the CMA now argues that the tribunal proceedings would have determined whether the directors failed in their duty to oversee management of Imperial Bank and to inform both the public and the regulator that they had no hand in approving the Sh2 billion corporate bond.
“The CMA has not taken any enforcement action against any of the directors. It has to the contrary allowed them to appear and present any relevant evidence to be taken into account by the CMA as it commences the enforcement process.
“There are substantial issues calling for further inquiry as to whether the former directors properly executed their statutory and fiduciary duties which is precisely the issue the CMA has established a process to establish,” the capital markets regulator says.
The bond that almost traded on the Nairobi Securities Exchange was stopped last October when the Central Bank of Kenya released a joint statement with CMA stopping its listing.
The Imperial Bank directors are facing seven allegations of breach of their fiduciary duty and negligence that saw the cash call approved despite massive fraudulent activities going on in the bank.
he bank directors claim that they are being targeted selectively for prosecution, while other parties involved in the bond issue have been left untouched.
They say the CMA is also acting as the accuser, prosecutor and judge in its own cause as it is an interested party in the bond issue having approved the cash call.
The regulator, however, says the directors should have awaited the tribunal’s decision after the inquiry, and filed an appeal in the event they were dissatisfied with the ruling.