Four top officers at Real People Kenya Limited fined over misuse of public funds

Four top officers at Real People Kenya Limited fined over misuse of public funds

The Capital Markets Authority (CMA) has imposed fines on four executives of Real People Kenya Limited (RPKL) over the misappropriation of publicly raised funds.

The fines on four board members which range between Ksh. 2.5 million to Ksh. 5 million follows the regulator’s investigations into the use of proceeds raised from medium term notes issued in 2015.

RPKL Board Chairman Arthur Arnold has been fined Ksh.5 million in addition to being barred from holding any directorship position until the resolution of the matter.

Other board members fined include Chief Executive Officer Neil Globbelaar (Ksh.5 million), Chief Finance Officer Arumugam Padachie (Ksh.2.5 million) and Executive Director to Real People Investments Holdings Limited (RPIHL)-South Africa, Bruce Schenk (Ksh.2.5 million).

The three have also been barred from holding any directorship position or any key personnel in a debt issuing firm or person approved by the markets regulator.

CMA noted they appeared to have been a plan involving Real People’s Kenyan subsidiary with the South Africa domiciled group to use proceeds of the medium term notes to settle an inter-company loan even before the application for the notes.

Following hearings, conducted by an Adhoc Committee of the CMA board, it has been determined that there was lack of effective oversight on the part of RPKL board on the application of notes proceeds.

Ksh.1.6 billion raised from the notes, and originally scheduled to support the firm’s SME lending in the country was instead deployed to settle a related party loan in South Africa.

Subsequent to the medium notes issue, RPKL sunk into financial details and failed in meeting obligations to bond holders leading to the extension of the notes redemption dates from August 2018 and August 2020.

Among the companies caught up in the distress is insurer Sanlam which participated in the noted issue as a creditor.

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