Sheikh and Company Advocates, a law firm owned by Mr Munir Ahmed’s sister, provided legal services to the bank and was given preferential treatment without the board’s knowledge.
CMA has also revealed that another firm known as Fozi Investments, owned by Mr Ahmed’s brother, was granted a loan under preferential treatment.
Mr Ahmed has filed a suit challenging charges against him by the CMA.
Former National Bank of Kenya (NBK) #ticker:NBK CEO Munir Ahmed has been accused of awarding lucrative contracts to his brother and sister without the knowledge of the lender’s board.
The Capital Markets Authority (CMA) has disclosed in its response to an ongoing court case that Sheikh and Company Advocates, a law firm owned by Mr Ahmed’s sister, provided legal services to the bank and was given preferential treatment without the board’s knowledge.
The regulator has also revealed that another firm known as Fozi Investments, owned by Mr Ahmed’s brother, was granted a loan under preferential treatment.
Mr Ahmed has filed a suit challenging charges against him by the CMA.
“There was non-disclosure of conflict of interest by the applicant to the board of the bank with respect to companies related to the applicant’s sister and brother who were doing business with the bank with preferential treatment,” says the CMA in its response.
The regulator further says that Mr Ahmed supervised grading of a Sh2.5 billion non-performing loan as performing in 2015, leading to Sh680 million being declared as earnings from these loans without approval of the board.
Further, the regulator says he was involved in procuring deposit mobilisation agents through which Sh1 billion was siphoned from the lender. The CMA in April imposed a fine and banned him from holding any position in a public listed company before asking the Director of Public Prosecutions to conduct further investigations and prefer charges against him and eight former officials of the bank.
The High Court has temporarily restrained the CMA from demanding Sh5 million in fines against Mr Ahmed for his involvement in the alleged fraud.
The regulator found that NBK’s former executives set up a deposit mobilisation scheme where commissions were paid to private agents for deposits placed by government agencies in the normal course of business.
Up to 90 per cent of those commissions may have been transferred back to persons related to NBK, the regulator says.
Mr Munir says the CMA’s sanctions were part of a scheme to make him the sacrificial lamb in order to protect other members of the board in the Sh1 billion scam.
The former NBK managing director argues in court papers that the CMA’s actions were meant to sacrifice him and sanitise the lender’s board whose membership includes the Treasury Secretary, adding that the CS is also a member of the CMA board
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