The High Court has temporarily suspended payment of a Sh18.5 million penalty slapped on former Uchumi Supermarkets chief executive Jonathan Ciano by the Capital Markets Authority over alleged breaches while he was head of the troubled retail chain.
In a consent presented in court Tuesday, CMA agreed to stop enforcing the penalty pending hearing and determination of a case in which he had challenged the fine.
“Consent as dictated and confirmed is hereby adopted as the order of the court, accordingly it is hereby ordered,” said Justice Roselyn Aburili.
But despite the suspension, it was also agreed that Mr Ciano will still deposit Sh9.5 million in a reputable bank of the CMA’s choice within 14 weeks as a condition to the grant of the halting order.
Both Mr Ciano and CMA’s lawyers told the court that should he fail to pay the monies as agreed, the regulator would be at liberty to take enforcement measures as necessary.
Mr Ciano, Chadwick Okumu, James Murigi, Bartholomew Ragalo and Joyce Ogundo moved to court on December 5, 2016 in a bid to stop the penalties imposed on them while claiming that the regulator had punished them for decisions taken collectively at Uchumi’s board meetings.
Through lawyers John Khaminwa and Jotham Arwa, they separately sued the CMA for issuing them with notices a year after they had left office.
In November, the regulator fined Mr Murigi and Mr Ragalo Sh600,000 and Sh855,000, respectively.
Mr Ciano was slapped with a Sh5 million fine and is expected to refund Sh13.5 million in earnings made from Uchumi for allegedly failing to disclose that he had a conflict of interest during his tenure on the board.
The five are accused of violating provisions of the CMA Act, the Securities and Public Offers Listing Disclosures regulations as well as guidelines on corporate governance by publicly listed companies.
But they argue that the CMA merely wanted to punish persons who did not fall within its regulatory ambit, which violates their right to a fair trial.
The CMA, however, has argued that rights of the five had not been violated and that as a regulator it has power to impose sanctions on any director who during his tenure breaches provisions of the Capital Markets Act, regulations, rules, guidelines as well as notices.