Why National Bank sent six executives on compulsory leave

Munir Ahmed was Tuesday suspended along with five other top managers of National Bank. PHOTO | FILE 

By HERBLING DAVID, hdavid@ke.nationmedia.com

In Summary

• The six executives were sent forced leave following a series of multi-pronged audits that the CBK and the Capital Markets Authority ordered and which found massive gaps in the bank’s books.
• The six managers are now expected to present themselves for questioning during the ongoing forensic audit.

National Bank of Kenya managing director Munir Sheikh Ahmed and five top managers were Tuesday sent on compulsory leave pending investigations into alleged breach of fiduciary duty and failure to adhere to corporate governance rules.

The bank did not name the five executives in a statement it sent to the media.

“We have instituted an internal review of our financial performance and as part of the mentioned tenets, the internal audit process shall be independent hence the request by the board for the six managers to proceed on leave,” said the bank’s chairman, Mohamed Hassan.

National Bank made the announcement Monday evening following a series of multi-pronged audits that the Central Bank of Kenya(CBK) and the Capital Markets Authority ordered and which found massive gaps in the bank’s books.

The bank, which is 22.5 per cent owned by taxpayers through the Treasury, re-appointed Deloitte & Touche as its auditors during the last annual general meeting held in March 2015.

The six suspended executives are now expected to present themselves for questioning during the ongoing forensic audit.

Workers, through the National Social Security Fund (NSSF), are the largest shareholders at National Bank with 134.5 million shares or a 48.05 per cent stake.

The bank had over the Easter weekend sent out two panic statements stating that the ongoing scrutiny of its accounts was in line with CBK operational guidelines.

“The aforementioned actions by the board are an unequivocal demonstration of our commitment to strict adherence to corporate governance tenets and the various CBK guidelines,” said Mr Hassan in a statement.

Mr Ahmed becomes Kenya’s first banking chief executive to be sent on compulsory leave in more than a decade.

Insiders said the drastic action to suspend Mr Ahmed follows a firm stance the CBK governor, Patrick Njoroge, has taken over regulatory matters.

READ: How CBK boss has ushered in a regime change since taking the reins

National Bank had customer deposits amounting to Sh93.6 billion in September 2015 but is yet to publish full-year results.

The bank, however, said it did not expect the executive changes to affect normal operations.

Wilfred Musau, the bank’s director, retail and premium banking, takes over as acting managing director pending conclusion of the audit.