Imperial Bank chairman Alnashir Popat. PHOTO | FILE
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CMA said directors could have stopped the cash on September 28 when it was credited to the bank or two days later when they reported results to CMA but instead went ahead with the ruse and made a public statement on October 2.
Owners of the collapsed Imperial Bank had several opportunities to stop a Sh2 billion bond issue before the money, now locked in for nine months, was deposited with the lender.
The Capital Markets Authority (CMA) says the shareholders had eight chances to stop the bond before it was alloted.
The bond that almost traded on the Nairobi Securities Exchange (NSE) was stopped last October when the Central Bank of Kenya (CBK) released a joint statement with CMA stopping its listing.
“The petitioners being in receipt of material information impacting the validity or reliability of the public offering documentation failed, omitted or maliciously declined to inform the authority and investing public despite their regulatory obligation to do so, that the bond process should be suspended to prevent losses and damages to public investors and the credibility of the wider capital markets,” CMA said in court fillings against a suit by Imperial Bank owners seeking to stop investigations into the issuance.
CMA said the directors learnt of the fraud on September 21, a day before allotment was made to investors.
The bank even appointed its chairman, Alnashir Popat, to chair the board audit committee when they learnt of the fraud but failed to notify CMA of the development.
Ten days before the bond almost traded internal investigations had encountered frustrations, giving credibility to suspicion of fraud.
CMA said directors could have stopped the cash on September 28 when it was credited to the bank or two days later when they reported results to CMA but instead went ahead with the ruse and made a public statement on October 2.
The money was deposited into the central depository accounts of the investors a day before the bank’s board met to discuss steps to secure the bond on October 7.
CMA argued that the directors do not warrant the temporary reprieve granted by the court stopping the authority from investigating them, adding the application was made in bad faith to stop the inquiry.
The market regulator said the nine shareholders listed in the suit had been postponing summons to appear before them since the beginning of the year.
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