Corporate News
Central Bank of Kenya Governor Patrick Njoroge. PHOTO | FILE
By DAVID HERBLING
In Summary
The Central Bank of Kenya has seized Sh8 billion from
disgraced Chase Bank directors who awarded themselves hefty
interest-free loans that brought down the mid-tier lender.
Kenya’s banking sector regulator on Thursday said it had confiscated all the prime properties of land irregularly acquired by Chase Bank board members under the guise of sharia-compliant lending.
CBK governor Patrick Njoroge said preliminary audit
by CBK shows that the directors had awarded themselves 15-year
interest-free loans under the guise of Islamic banking.
“We have to hold these people to account, the
population will not accept that they just walk around scot-free,” said
Dr Njoroge at a briefing on Thursday.
CBK collateralised these loans to allow for the re-opening of the bank under the management of KCB.
The prime assets forcefully seized include a
business park in Karen, a three-acre parking lot in Nairobi, some 240
acres of land on Mombasa Road, a three-acre plot next to the German
Embassy on Riverside Drive and various high-end properties in Dubai.
Chase Bank re-opened on Wednesday after it was
unexpectedly placed under receivership on April 7 owing to liquidity
problems created by a run on deposits.
Those on the bank’s eight-member board are ousted
chairman Zafrullah Khan, suspended managing director Duncan Kabui,
current chair Muthoni Kuria and CEO Paul Njaga.
Others are lawyer Anthony Gross, businessman Rafiq
Shariff, Richard Carter, and French PE firm Amethis co-founder Laurent
Demey.
Irregular insider borrowing camouflaged as
Musharakah — a sharia compliant financing used by Islamic banks — was
previously classified as ‘other assets and interest receivable’ in the
balance sheet.
The SME-focused lender also reported a surprise
Sh743 million loss for year ended 2015 after re-stating provisions for
bad debts.
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