Ex-NBK official’s property frozen in Sh1bn fraud case

Mr Paul Muthaura, CMA chief executive officer. FILE PHOTO | NMG 

By GALGALLO FAYO

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Summary

• CMA is seeking the Assets Recovery Authority (ARA)’s assistance to trace and recover Solomon Alubala’s movable and immovable assets for purposes of protecting NBK shareholders.
• Mr Alubala has filed a petition in court contesting the penalties that the markets regulator imposed on him for his alleged participation in the Sh1 billion fraud.
• The CMA has banned Mr Alubala from holding office in any public listed company besides paying a Sh104.8 million fine.

Former National Bank of Kenya (NBK)  head of treasury Solomon Alubala’s assets have been frozen as part of ongoing investigations into the Sh1 billion fraud at the bank.

The Capital Markets Authority (CMA) says in a letter to the Assets Recovery Authority (ARA) that it has identified assets belonging to Mr Alubala and placed restrictions on at least one.

“In this regard and pursuant to the MoU signed between our institutions, the authority cordially requests your office to facilitate the tracing and confiscation of assets both movable and immovable belonging to and registered in the name(s) of Mr Solomon Alubala…pending determination of the ongoing appeal,” the CMA says in the letter dated May 21.

CMA, which is the capital markets regulator, says in court papers seen by the Business Daily that it is seeking the ARA’s assistance to trace and recover Mr Alubala’s movable and immovable assets for purposes of protecting NBK shareholders.

Mr Alubala has filed a petition in court contesting the penalties that the markets regulator imposed on him for his alleged participation in the Sh1 billion fraud. The CMA has banned Mr Alubala from holding office in any public listed company besides paying a Sh104.8 million fine.

Mr Alubala had initially filed an appeal with the CMA Tribunal contesting the CMA’s decision but later moved to the High Court on grounds that the tribunal is not fully constituted and could not hear the case.

The CMA says in its response to Mr Alubala’s suit that it has identified two properties in Ngong and Nairobi as well as flagged a suspicious bank transfer.

It has however only managed to place restrictions on one property situated in Ngong. The Land Registrar has declined to place restrictions on a plot in Nairobi on which an apartment has been built arguing that it ‘does not have tittle of itself’.

The CMA’s decision to pursue Mr Alubala’s assets is being seen as a signal of what may face other suspects in the case.

The list of officials that the CMA has imposed sanctions against includes former NBK managing director Munir Sheikh, who is banned from holding any position in a public listed company and is required to pay a Sh5 million fine.

George Jaba (former chief credit officer), Chris Kisire (who was chief finance officer till April 2015), Wycliffe Kivunira (former acting chief finance officer), Boniface Biko (former director corporate and institutional banking) and Dennis Chumbe (former relationship manager business banking) are also on the list of former senior managers facing sanctions over the alleged cooking of books and theft of funds.

READ: Ex-NBK executives banned and fined for theft of funds

The alleged fraud is linked to a deposit mobilisation programme that paid commissions to private agents for funds banked by government agencies.

CMA also said in its report on NBK that it had found the Nairobi Securities Exchange (NSE)-listed bank’s profits grossly overstated and Sh1 billion lost through an embezzlement scheme.

Investigations established that up to 90 per cent of the commissions paid to the private agents may have subsequently been transferred back to NBK officials. Mr Alubala has denied the allegations claiming that he was investigated, heard, prosecuted and judged by the CMA board, the agency’s head of investigations and its CEO.

READ: Ex-NBK boss challenges CMA fines and ban

The CMA maintains that the charge was not criminal but an administrative process and that the authority investigated as an administrative body, not a judicial or quasi-judicial body.

Mr Munir, former chief finance officer, Chris Kisire have filed seprate suits contesting the CMA’s decision in the Sh1 billion scam.

Mr Munir says the CMA’s sanctions were part of a scheme to make him the sacrificial lamb in order to protect other members of the board in the Sh1 billion scam.