CMA seeks damage control with apology

CMC Holdings showroom in Industrial Ares, Nairobi. The capital markets regulator has expunged claims in its audit report linking Marubeni Corporation to fraud. FILE

By VICTOR JUMA,

IN SUMMARY
Regulator withdraws claims that had implicated a Japanese company in fraud at CMC.
Marubeni had sought an apology from CMA over the allegations and warned of legal action, according to their Nairobi representatives.

The Capital Markets Authority (CMA) has moved to avert paying damages to a Japanese multinational after the regulator offered a rare apology to the firm for implicating it in fraudulent transactions at auto firm CMC Holdings.

The regulator has expunged claims from its audit report that Marubeni Corporation facilitated the inflating of import prices with the additional amount routed into an investment trust account and the proceeds paid secretly to past and current directors as well as employees.

Former CEO Martin Forster and past chairman Jeremiah Kiereini were alleged to have been at the centre of the secret accounts.

(READ: Forster named as top beneficiary of Jersey accounts)

Marubeni had sought an apology from CMA over the allegations and warned of legal action, according to their Nairobi representatives.

It is not clear whether the Japanese firm will proceed to seek compensation from the regulator after the regret notice that partially exonerated Mr Forster.

“The allegations were serious and damaging to us. We had engaged our lawyers after the report (maligning us) came out. I cannot comment on our next course of action,” an official at Marubeni’s Nairobi office who only identified herself as Ayako told the Business Daily Monday on phone.

CMA said that Marubeni has so far not made a claim for damages, adding that the delay in issuing the apology is due to other existing lawsuits.

“There has been no claim for damages by Marubeni. The Corporation wanted the report corrected to reflect the actual position and this was done,” CMA said in a statement. The capital markets regulator added that it delayed delivering the apology “due to unrelated outstanding litigation touching on the report”.

In the CMA audit, the Kenyan firm was said to have asked international car makers to increase the bill by between two and 1.5 per cent and present this as the full invoice to CMC Motors.

Legal experts say corporations usually accept public apologies as a remedial measure, especially if dealing with organisations like CMA that are not as cash-rich compared to profitable businesses.

“An apology is often enough and is usually published after securing the commitment that there will be no lawsuits thereafter,” said Philip Murgor, a city lawyer.

Sources at Marubeni told the Business Daily that the multinational had locked horns with CMA over the matter for months before the regulator finally agreed to issue the regret notice.

The regulator initially sought to make a low-profile apology but the trading firm demanded a more prominent placement to redeem its image.

“CMA had planned to publish the apology in the weekend papers but Marubeni insisted that it appears on a commercial (working) day,” our source said.