Ex-CBK governor’s wife sought favours from Imperial Bank boss

The controversy surrounding the collapse of Imperial Bank has taken a new turn after it was alleged in court that former Central Bank of Kenya governor Njuguna Ndung’u’s wife received gifts from the bank’s former managing director, Abdulmalek Janmohamed, as part of a calculated scheme to co-opt the banking sector regulator into abetting a massive fraud that crippled the lender.

Imperial Bank’s shareholders, who are seeking to prevent the CBK from liquidating the bank, say Mrs Nancy Ndung’u at one time billed Mr Janmohamed for her stay with a companion at a luxury resort in Thailand indicating the toxic relationship the regulator had with the bank.

“It has come to our knowledge that the CBK, during the period when the bank (was) operational, had more than arms’ length relationship with the bank (Imperial) … in which the spouse of a senior CBK official enjoyed the largesse of the bank’s then group managing director, Abdulmalek Janmohamed,” Anwar Hajee, a director of Abdumal Investments Limited, which holds a 14 per cent stake in Imperial Bank, says in an affidavit.

The correspondence and transactions between Mrs Ndung’u and the late Janmohammed are filed in court as part of the evidence that the CBK was complicit in the lender’s multi-billion shilling fraud.

“Please inform Mr Janmohamed that we shall be staying at Sheraton Grande Sukhumvit Hotel from 21st to 24th. The organisers of the conference have kindly agreed to drive us to the resort,” Mrs Ndung’u wrote to Mr Janmohamed’s long-serving secretary, Anne Mboya, on August 03, 2011, adding that the only assistance they needed was on the return trip on August 29.

Mrs Ndung’u and her undisclosed companions apparently wanted to extend their stay in Thailand by five days upon expiry of their residence at the Bangkok-based luxury hotel Sheraton Grande Sukhumvit that was tied to a conference.

Mr Janmohamed indulged them and footed their bills at Chiva-Som International Health Resort, located 185 kilometers south of Bangkok, where they checked in on August 24, 2011 and departed on schedule five days later.

Chiva-Som is one of the top leisure/health resorts in the world, offering spas and physical fitness training, raising questions as to why the deceased would foot the bills for Prof Ndung’u’s associates.

Mr Janmohamed positively responded to the request by granting the holidaymakers authority to charge all their expenses to his personal Visa credit card whose photocopy he availed to the resort.

Imperial Bank shareholders argue that rather than initiate a process to reopen the bank, the CBK is keen to liquidate it to cover its role in the 13-year multi-billion-shilling fraud that only came to light after Mr Janmohamed’s death.

“By reason thereof, we verily believe that afore-stated actions are being undertaken with a view to obscuring certain matters,” Mr Hajee says.

Imperial Bank shareholders accuse the CBK of laying the groundwork for the lender’s liquidation that is likely to benefit its rivals.

The CBK has allowed payments of up to Sh1 million to depositors of Imperial Bank, but the shareholders now claim that plans are under way to sell the collapsed bank’s assets as well.

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The collapsed lender claims its rivals have started hiring its senior staff and are seeking to establish which parts of the collapsed bank are healthy enough to be taken over.

“By reason of the matters set out above, we verily believe that the plans for the interested parties to cherry-pick the bank’s assets are at a very advanced stage,” Imperial Bank’s shareholders say.

The CBK was expected to make a decision on the future of Imperial Bank next month, but the collapsed bank’s shareholders have applied for judicial review seeking protection from what they believe will be an announcement of the bank’s liquidation.

The regulator and the shareholders have disagreed on a number of issues, including the extent to which the bank needs to be recapitalized before it opens its doors for business.

If proven, the claim that Mr Janmohamed roped in the CBK’s top leadership to abet the grand theft will lend credence to multiple allegations that top CBK officials protected rogue banks in return for personal favours.

Imperial and Dubai Banks were closed in October and August last year respectively, a few months after Prof Ndung’u left office and a new person was appointed to head the CBK’s bank supervision department.

The regulator had for years ignored reports from whistle-blowers of fraud and outright theft at Dubai Bank, whose chairman Hassan Zubedi had reportedly boasted of enjoying the protection of Prof Ndung’u and heads of other government agencies.

In announcing the collapse of Dubai Bank, the CBK cited the same malpractices that had long been pointed out by the whistleblowers, revealing the divergent regulatory approach between the current and former regulators.

“The CBK as a prudential regulator has considered and determined that Dubai Bank Kenya Limited’s violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures, are detrimental to the interests of its depositors, creditors and the public,” the CBK said in a statement announcing closure of Dubai Bank.

“In light of the above, the CBK has been compelled to act and appoint KDIC as receiver for the bank.”

At Imperial, Mr Abdulmalek was a key player in the theft of customer deposits and reckless lending among other breaches of banking laws.

A company named W.E. Tilley (Muthaiga) Limited, for instance, would receive billions of shillings in sham loans whose collateral it would offer to structure later at its pleasure.

“We hereby acknowledge the receipt of an amount of Sh10 billion only. We confirm that we are willing to provide collateral for the disbursements made to us,” the fish processor wrote to Imperial on October 10, 2015, three days before the bank was put under receivership.