CMA dishes Ksh.60 million fines to former Chase Bank directors

The Capital Markets Authority (CMA) has dished out fines of Ksh.60 million to former Chase Bank Directors for their role in the issuance of the bank’s botched Ksh.4.6 billion bond in 2015.

Among the fined directors include the then Managing Director Duncan Kabui and CEO Paul Njaga who have received fines of Ksh.2.5 million each, with the former MD being further disqualified from holding a director role for a 10 year period.

Other directors and key managers on the receiving end of the regulatory enforcement action include former Group Finance Director Ken Obimbo who has received a Ksh.5 million and barred from holding a director role for five years.

Board members; Anthony Gross, Laurent Demey and Muthoni Kuria have received fines of Ksh.2.5 million each while Richard Carter and Rafiq Sharrif have received fines of Ksh.1 million and Ksh.2.5 million each.

Audit firm Deloitte and Touché which was the reporting accountant during the issuance of the bond has received a fine of Ksh.10 million with the CMA further referencing the conduct of the firm to the Institute of Certified Public Accountants of Kenya (ICPAK) for further action.

During its probe of Chase’s bond issuance, the capital markets regulator established falsehoods in the preparation of the lender’s financial statements, conflict of interest and failure to disclose material information.

Following the conclusion of administrative hearings by a CMA Ad Hoc Committee determined there was lack of effective oversight by the board members regarding the use of funds raised from the 2015 medium term notes (MTN) issue.

The bank had intended to apply the funds in financing the expansion of its branch network, strengthen its capital base and invest in IT and product development.

On April 7, 2016, nearly a year after the bond issuance, Chase Bank went under from a combination of rumours and panic withdrawal by customers, forcing the Central Bank of Kenya (CBK) to place the lender under receivership.

Recently, CBK approved a plan to liquidate the bank marking the end of the road for the lender.