NBK’s former managing director, Munir Sheikh, tops the list of senior
managers alleged to have participated in the illicit scheme. FILE PHOTO |
NMG
Eight former senior executives of troubled National Bank of
Kenya (NBK) have been fined millions of shillings and banned from
holding office in listed companies for up to 10 years over cooking of
books and theft of more than Sh1 billion from the lender.
books and theft of more than Sh1 billion from the lender.
The
capital markets regulator on Wednesday said its investigations had
found the officials liable for misrepresenting the bank’s financial
statements for the periods ended June 30, 2015 and September 30, 2015.
The
Capital Markets Authority (CMA) said it had found that the Nairobi
Securities Exchange (NSE)-listed bank’s profits were grossly overstated
and Sh1 billion lost through an embezzlement scheme.
“The
board of the Capital Markets Authority (CMA) has taken administrative
action against the NBK board members and former senior managers, who
served at the bank as at December 31, 2015 for misrepresentation of
financial statements and embezzlement of funds,” the regulator said in a
statement.
The CMA said it has also recommended to the
Office of the Director of Public Prosecutions, the prosecution of some
of the senior managers and further criminal investigation of additional
individuals.
NBK’s former managing director, Munir
Sheikh, tops the list of senior managers alleged to have participated in
the illicit scheme. He has been banned from holding any position in a
public listed company and hit with a Sh5 million fine.
Other
senior managers facing sanctions over the alleged cooking of books and
theft of funds are George Jaba (former chief credit officer), Chris
Kisire (who was chief finance officer till April 2015), Wycliffe
Kivunira (former acting chief finance officer), Solomon Alubala (former
head of treasury), Boniface Biko (former director corporate and
institutional banking) and Dennis Chumbe (former relationship manager
business banking).
The CMA said it had concluded an
inquiry into the affairs of the former executives and will now pursue
their prosecution based on whistle blower information.
The
misrepresentation of financial statements was linked to a premature
recognition of sale of assets amounting to Sh800 million,
under-provisioning for loans, and wrongful recognition of interest
income leading to overstatement of profit in the respective periods.
“The
bank had published unaudited financial statements reporting profits of
Sh1.7 billion for the quarter ended June 30, 2015 and Sh2.2 billion for
the quarter ended September 30, 2015 but subsequently reported a loss of
Sh1.2 billion in audited financial statements for the period ended
December 31, 2015,” it said.
The
alleged embezzlement scheme is linked to a deposit mobilisation
programme that paid commissions to private agents for funds banked by
government agencies.
The CMA says investigations had
established that up to 90 per cent of the commissions paid to the
private agents may have subsequently been transferred back to NBK
officials.
The regulator said it had issued a regulatory caution to the board members who served during the period under review.
The
CMA has also recommended criminal investigation of additional
individuals for alleged involvement in the embezzlement scheme. Mr Munir
has been disqualified from holding a board position in a public issuer
of securities or working for a licensed person for a period of three
years.
He will also suffer a Sh5 million financial penalty for his role in ineffective management of the bank.
Mr
Alubala and Mr Kisire have also been disqualified from working for an
issuer of securities or a licensed person for a period of 10 and three
years respectively.
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