Mr Fred Mweni is seeking to stop criminal proceedings against him. File
What you need to know:
Details of his agreement with the CBK emerged in an application filed at the High Court last week through which Mr Mweni is seeking to stop criminal proceedings against him.
Mr Mweni was suspended from holding directorship of any Capital Markets Authority licensee last year for allegedly refusing to co-operate in undisclosed investigations.
Blacklisted bonds trader Fred Mweni has agreed to pay the Central Bank of Kenya (CBK) Sh39.5 million as compensation for stolen Treasury bonds.
Details of his agreement with the CBK emerged in an application filed at the High Court last week through which Mr Mweni is seeking to stop criminal proceedings against him, his company and co-directors.
Mr Mweni, who was banned from holding directorship at any Capital Market Authority (CMA) licensee last year, says he moved to court after CBK failed to honour the agreement which required the regulator to stop criminal proceedings arising from theft of the government papers.
Mr Mweni also wants the High Court to restrain Banking Fraud Investigation Unit (BFIU) police from arresting him arguing that he has already entered an agreement to settle the stolen bonds with the Central Bank.
“That this honourable court be pleased to grant an order of injunction to restrain the first respondent (The Inspector General of Police) and third respondent (Director of public Prosecution) by themselves or through the Banking Fraud Investigation Unit police or any of their agencies from arresting, searching and/or issuing threats to arrest the second petitioner (Mweni),” says the trader in the application dated February 18.
Mweni was suspended from holding directorship of any Capital Markets Authority licensee last year for allegedly refusing to co-operate in undisclosed investigations that were being conducted by the regulator.
He later filed a case against the CMA at the High Court applying for a quashing of the ban. Separately, BFIU has been investigating the theft.
Mweni says his company, Tsavo Securities, entered an agreement with Central Bank on December 13 last year in which it agreed to pay back the Sh39.5 million and the Central Bank was in turn to withdraw the criminal case against Tsavo Securities, its directors and also unfreeze its bank accounts.
Mweni claims Tsavo paid Sh20 million to Central Bank in January, with an undertaking to pay the balance through instalments and also provided collateral for the same.
However, CBK is yet to withdraw the criminal case and unfreeze the bank accounts.
“Instead, the first respondent (CBK) has, through the Banking Fraud Investigation Unit Police, heighted his quest to have the second petitioner (Mweni) arrested and jailed over the same issue,” reads papers filed in court.
The papers filed in court detail the events leading to the arrest of a co-director at Tsavo Securities, Bokole Mweni, and how Mweni acquired the stolen bonds.
He says in March last year, one of their regular customers, John Thagana, approached his company to sell his bonds, with an offer to pay commission of Sh3.5 million which they accepted.
The bonds are FXD1/2012/05 worth Sh18.5 million, IFB1/20012/2012 worth Sh9.5 million and FXD1/05 worth Sh11.5 million. In a supporting affidavit, Mr Mweni says the bond was transferred to their custody in August last year.
“We eventually got buyers, sold the bonds and Mr JT (John Thagana) came to our offices…where we diligently gave him his money and he left us with the commission,” says Mweni.
This, he adds, was after making all the requirements of bond transactions through a letter to the Central Bank for notification and approval.
Later in October his co-director Mr Bokole was arrested by BFIU officers over the bond theft, arraigned in court and later released on bond of Sh2 million.
He says at this time he escaped arrest only because he was in South Africa. He learnt of his impending arrest and on coming back he entered a deal with CBK, but says BFIU is still after him with an intention to arrest.
Mweni further accuses CMA of the predicament facing him, claiming that they are using BFIU to harass him and use this as defence in the suit which he has sued CMA for suspending him.
“I wish to state that the impending arrest is unfair, malicious, unlawful and unconstitutional as it’s aimed at settling scores by BFIU on behalf of the market regulator (Capital Markets Authority) whom I have sued,” says Mweni.
