- Imperial Bank directors have stopped the Capital Markets Authority (CMA) from pursuing them over the Sh2 billion corporate bond that the lender issued a month before it was placed in receivership.
- The eight directors have blocked investigations through the CMA tribunal on grounds the probe team will be impartial.
Imperial Bank directors have stopped the Capital Markets Authority (CMA) from pursuing them over the Sh2 billion corporate bond that the lender issued a month before it was placed in receivership.
The eight directors have blocked investigations through the CMA tribunal on grounds the probe team will be impartial.
The investigation follows a Supreme Court directive in December giving the regulator the rights to investigate circumstances under which the bank proceeded with the bond despite insider knowledge it was in trouble.
The court asked the regulator to form an independent unit to look into the directors who claim that the investigation team could be biased because it has two CMA boards members and a director of a listed firms
“The other former Imperial Bank Limited (IBL) board members declined to appear before the Ad Hoc committee and filed an appeal at the Capital Markets Tribunal,” CMA said yesterday said in a statement.
The Imperial Bank ad hoc Committee included CMA Board members Mr Thomas Kibua and Mr John Birech, retired Chief Justice Willy Mutunga, Mr James McFi Ms Anne Eriksson and Ms Patricia Kiwanuka.
One director, Christopher Diaz broke ranks and appeared before the CMA board and has been absolved of wrong doing as he was newly appointed as an independent and non-executive board member when the bond raising process was already underway.
If the CMA finds the eight directors culpable of failing the bank, it may impose financial penalties as well as blacklist each from holding a similar position in any listed company.
The directors moved to the Supreme Court after the Court of Appeal allowed the CMA to continue with its regulatory mandate as the licensing, investigative and enforcement agency.
The eight directors, including Alnashir Popat, Omurembe Iyadi, Jinit Shah, Anwar Hajee and Hanif Somji, argued that Section 11(3)(cc) & (h) of the CMA Act is unconstitutional, because it allows the regulator overlapping roles.
The CMA went after the directors on grounds they abetted fraud and breached the fiduciary duty to depositors.
Imperial Bank went under with the Sh2 billion in bonds, whose sale to the public had been cleared by the CMA, leaving investors bruised.
The directors challenged the investigation and enforcement arguing that CMA officers were involved in investigations before asking them to respond to seven allegations within 14 days.
They said appearing before a panel of CMA officers and subsequent enforcement proceedings would make the regulator the accuser, investigator, prosecutor and judge at the same time.