Imperial Bank owners had all the time to stop bond: regulator
What you need to know:
- The bank even appointed its chairman, Mr Alnashir Popat, to chair the board audit committee when they learnt of the fraud but failed to notify CMA on this development.
Owners of the collapsed Imperial Bank had several opportunities to stop a Sh2 billion bond issue before the money, now locked in for nine months, was deposited with the lender.
The Capital Markets Authority (CMA) said the shareholders had eight opportunities to stop the bond before it was allotted, sold and announced to the public.
The bond that almost traded on the Nairobi Securities Exchange (NSE) was stopped in October last year when the Central Bank of Kenya (CBK) released a joint statement with CMA stopping its listing.
“The petitioners being in receipt of material information impacting the validity or reliability of the public offering documentation, failed, omitted or maliciously declined to inform the authority and investing public despite their regulatory obligation to do so that the bond process should be suspended to prevent losses and damages to public investors and the credibility of the wider capital markets,” CMA said in court filings against a suit by Imperial Bank owners seeking to stop investigation into the issuance.
CMA says the directors learnt of the fraud on September 21, a day before allotment was made to investors.
The bank even appointed its chairman, Mr Alnashir Popat, to chair the board audit committee when they learnt of the fraud but failed to notify CMA on this development.
Ten days before the bond was to trade, the internal investigations had encountered frustrations, giving credibility to the suspicion of the fraud.
CMA said directors could have stopped the cash on September 28 when it was credited to the bank or two days later when they reported results to CMA but instead went ahead with the ruse and made a public statement on October 2.
The money was deposited into the central depository accounts of the investors a day before the bank’s board met to discuss steps to secure the bond on October 7.
CMA argues the directors do not warrant the reprieve granted by court stopping it from investigating them, adding the application was made in bad faith to stop the inquiry.
