Rout out Imperial bank chiefs, MPs urge Central Bank

Central Bank of Kenya Governor Patrick Ngugi Njoroge answers MPs questions during his vetting on June 16, 2015. MPs want the CBK governor to rout out Imperial Bank's chiefs. PHOTO | SALATON NJAU |   NATION MEDIA GROUP

In Summary

• Kisumu East MP Shakeel Shabbir said re-opening the bank and allowing the same people who looted it to invest would be akin to sanitising the fraud.
• Imperial Bank was put under receivership last month after revelations that the management had siphoned over Sh34 billion.
• According to court filings, the family of Janmohmaed begun transferring his assets after he died, even as the bank remained under receivership.
• The regulator through KDCI has also filed to freeze the assets of 20 firms and individuals implicated in the scam.

By OTIATO GUGUYU
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Members of Parliament are questioning the reasons behind Central Bank’s push to rescue Imperial Bank, saying it could help the criminals who looted the bank go scot free.

Questioning CBK Governor Patrick Njoroge, the National Assembly Finance Committee raised concern over the fact that the very people who brought the bank down are being asked to participate in its revival without any deterrent action being taken.  

Kisumu East MP Shakeel Shabbir said re-opening the bank and allowing the same people who looted it to invest would be akin to sanitising the fraud.

Imperial Bank was put under receivership last month after revelations that the management had siphoned over Sh34 billion.

One of the firms implicated in the scam, W.E. Tilley (Muthaiga) has admitted receiving Sh10 billion from Imperial Bank and has expressed willingness to return the money.

“This Tiley admitted to taking money and then used it to buy dollars which it invested in your financial system. Instead of closing the loop, you are allowing them to sanitise this money,” Mr Shabbir said.

CLAMP DOWN

The MPs said the same firms involved in the collapse of Charterhouse Bank had been caught up in the Imperial Bank saga, adding that the CBK governor should use this opportunity to clamp them.

“Bring in the Kenya Revenue Authority; if one took Sh10 billion, there has to be some sort of tax. What worries us is that since you took action a month ago, there has been no arrest made. Kenyans want to know that when someone plays with their money, they will go to jail,” Mr Shabbir added.

North Imenti MP Abdul Raheem Dawood said the CBK was more concerned about re-opening the bank than on arresting the criminals.

The CBK governor said they were putting together a watertight case against the bank’s management, the board and anyone who authorised the transactions.

Dr Njoroge said they were also carrying out a parallel audit to smoke out insiders who colluded with the bank’s management.

But MPs insisted that CBK was taking too long to crack the whip, adding that the fraudsters could leave the country.

“We have a history in this country, with Trade Bank and Triton. By the time you have your comprehensive case ready, they will be out of the country,” said Mr Dawood.

The  governor admitted that they had overlooked that possibility, adding that they would ensure they remain in the country.

COURT FILINGS

According to court filings, the family of Janmohmaed begun transferring his assets after he died, even as the bank remained under receivership.

The CBK then moved the accounts of Mr Janmohamed’s company, Janco Investments, his estate and trust fund, Abdulsultan Rehemtulla Janmohamed Trust.

The suit seeks to bar 10 people, including family members who have allegedly started transacting in Mr Mohamed’s estate, from interfering with the assets tied to the bank.

The regulator through KDCI has also filed to freeze the assets of 20 firms and individuals implicated in the scam.

In a case that will be heard next week on Thursday, CBK wants the property of companies such as W.E Tilley (Muthaiga), Primecatch, Mara Fish Packers, J Fish Kenya, Victorian Delight, Ruby Red, Value Pak Foods, From Eden, Aqualite, Marmo E Granito Mines (T), Marmo Marble (U) and Fishways Uganda, frozen.

The Jessa family — including Zulfikar Haiderali Jessa, Nasir Haiderali Jessa, Nargis Jessa, Nadir Azizali Jessa, Firoz Jessa, Salim Jessa, Irfan Shamshadin Jessa and Nashiv Haiderali Jessa — implicated in the scam, have also been listed in a suit to freeze their assets.

Imperial Bank is expected to open in a few weeks, although details of the negotiations between the regulator and the shareholders have not been made public.

Governor Njoroge said investors who had locked Sh2 billion in the bank would receive their principal and a negotiated interest rate, but which would not be as lucrative as the rates they had hoped to get.

Their money has been ‘ring-fenced’ under the recovery plan, he said.

The CBK assured savers with deposits of not more than Sh500,000 that they would start accessing all their funds when the bank reopens.

Those with large sums will access only 5 per cent of their money.

The balance will be released in a structured schedule over a two-year period.

About 52,398 account holders were stranded after their money was locked up in Imperial Bank following the receivership order.

The regulator believes the bank is liquid, has a healthy loan book and — excluding the management — has a competent team that related well with customers.

The recovery plan will require injection of new capital, conversion of large deposits to equity, recovery and collateralisation of fraudulent loans, and a change of board of directors and senior management.

Reports indicate that the parties involved have agreed to put in Sh10 billion, but they are yet to agree on the formula of converting deposits into shares, and the interest rates to be paid on deposits converted into shares.

The bank, which was founded as Imperial Finance and Securities Company Ltd, commenced operations as a financial institution in 1992.

It has 28 branches in Kenya and five in Uganda.