Auctioneers have put on sale multi-million shilling properties belonging to a former bonds dealer who was banned from the market for illegal trades after he failed to settle a bank loan.
Mr Fred Mweni was blacklisted by the Capital Markets Authority (CMA) seven years ago for illegally dealing in government bonds and has been attending court cases over the matter.
The Business Daily learnt that the auction of the properties located in Kilifi County is linked to a bank loan default. It is set to happen on July 22.
Auctioneering firm Garam Investments Monday invited potential buyers of Mr Mweni’s two separate parcels of prime land in Kilifi County, totalling about 11 acres.
The former head of investment advisory firm Tsavo Securities did not respond to our requests for comment.
The CMA did not also respond to our queries on whether the auction was separate from an earlier effort by the State to seize assets from the trader to settle claims slapped on him by the regulator.
Four years ago, Mr Mweni asked the High Court to extend an order stopping the Central Bank of Kenya from auctioning his family assets to recover a Sh48.3 million claim arising from his alleged involvement in fraudulent trading of Treasury bonds.
Tsavo Securities, where Mr Mweni was a director, and Manline Telecommunications were implicated in the Treasury bonds trading scandal.
The auctioneers said in Monday’s notice the four and seven-acre pieces of developed properties are located off the Mombasa-Malindi Highway.
“…The land…registered in the name of Fredrick Tsofa Mweni is located off the Mombasa Malindi Highway,” said the auctioneers. Mr Mweni was slapped with a 15-year ban from acting for any listed company following his involvement in the trade of fraudulent Treasury bonds worth Sh105 million.
CMA blacklisted him on December 21 2012 on grounds that he was blocking investigations into a multi-million-shilling fake bonds trading scandal.
The dealer was entangled in the fake bonds trading scandal for his alleged involvement in trading of three bonds worth Sh18.5 million, Sh9.5 million and Sh11.5 million respectively.
Mr Mweni had in earlier court papers said his company, Tsavo Securities, had entered into an agreement with the Central Bank on December 13 last year in which it agreed to pay back the Sh39.5 million.
The Central Bank was to in turn withdraw the criminal charges against Tsavo Securities, its directors and also unfreeze its bank accounts.
Prior to his suspension, Mr Mweni is known to have wielded huge influence in the bonds market even though he merely operated an investment advisory firm that did not have direct access to the bond-dealing system and could only channel trades through stockbrokers.
The scam is said to have been centred on a peculiar method of trading Treasury bonds that commercial banks and stockbrokers had been using.
Known in capital markets jargon as sale-buy-back, the transaction involves the sale of a Treasury bond by one dealer to another, with the promise of buying it back in future.
The scheme would leave innocent investors at a loss, but make a profit for the colluding dealers.