Rogue bank managers should be jailed

Chase Bank was the overall “Best Company to Work For” in 2015 in Kenya, among the large corporations. It was awarded the title by Deloitte, the same audit firm that five months later disowned the bank’s books and threw it into a tailspin. The rich irony of the situation and the sudden change of fortunes shouldn’t be lost on anyone.

Around the same time the award was announced, Chase Bank was taking out eye-popping amounts in loans. One still unnamed director lent himself Sh7.9 billion, mostly without security, eventually taking 118 per cent of the bank’s core capital. The Central Bank of Kenya regulations say employees and directors may not borrow more than 25 per cent.

“Dear Patrick Njoroge, Chase Bank must die or be killed. Move whatever is left of our money to (another bank) and prosecute the looters.” That was businessman Charles Gacheru’s tweet on Monday. His events and public relations outfit, IMG, had its primary business account with Chase Bank. Just hours before the CBK placed it under receivership, senior managers reassured him and a fellow director that all was well, and that there was no need to to make any panic withdrawals. One employee even cancelled a Real Time Gross Settlement he had requested and lied to Gacheru’s partner that Gacheru had stopped it.

The Central Bank maintains that social media led to the run on the bank that caused its collapse.“Chase Bank Ltd experienced liquidity difficulties following inaccurate social media reports and the stepping down of two of its directors,” it said in a statement. “Consequently, it was not able to meet its financial obligations on April 6, 2016.”

The two directors are chairman-cum-major shareholder Zafrullah Khan and group managing director Duncan Kabui. The assumption is that they presided over the understating of the bank’s bleak financial position by at least Sh8 billion. They have been questioned by the police, but nothing more.

PANIC MERCHANTS

Another of Chase Bank’s 55,000 depositors is entrepreneur and philanthropist Shamit Patel. “Alternative saving ways? Can’t keep it at home because, thieves. Can’t keep it in bank because, thieves. Can’t bury it because land grabbing.” The collapse of the bank nearly shutting his business. There were many angry depositors outside many of its 55 branches, many of them small- and medium-enterprise owners who were  stranded after the borderline criminal activity.

Several days later, the regulator was still blaming social media for the run on the bank as it announced a new facility to prevent another collapse. Another statement on Sunday said Chase Bank was unable to meet its financial obligations “after inaccurate social media reports.” Granted, talk of an impending shutdown did cause hundreds, possibly thousands, of customers, to withdraw their cash in bulk.

The run on the bank came several months after its directors broke the law and took loans well above what they were entitled to. The online provocateur @roomthinker posed the all-important question: “What’s the difference between a Sh7.9 billion unsecured loan and a bank robbery?” Another raconteur had the right answer: “You wear a suit for one and a mask for the other.”

Banking analyst Sunil Sanger told me on Sunday that the social media posts might have helped some small depositors access their money from the bank before it closed its doors. “I’m not in agreement with that,” he said. “The fundamental reasons why the run happened was because of how Chase Bank handled the reporting of their accounts.” Of course the information was disseminated more quickly on the Internet and there was no shortage of uninformed opinion.

At the heart of financial denouements like Chase Bank, Dubai Bank or Imperial Bank are white-collar criminals who are getting away with murder. Just because they have not killed anyone or stolen somebody’s chicken, they can live out the rest of their lives comfortably while their lawyers ensure their court cases go nowhere.

“If your child wants to be an entrepreneur, slap them hard. Teach them how to be bankers and lawyers,” concluded Gacheru. Outside one closed branch where the Central Bank notice was posted, someone had scrawled out expletives to Khan and Kabui. “F&*% you all directors and executives! We will get you.” It is easier for an anonymous vigilante like this graffiti artiste to mete out justice than the official channels for seeking redress in Kenya.

In a country where you are guilty until proven rich, it is easier to blame the simpletons on social media than place blame where it lies: in the crooks wearing their ill-gotten expensive suits. One would expect more of the well-intentioned CBK governor Dr Patrick Njoroge. Less than a year into his term, he’s not been afraid to exorcise the ghosts of impropriety and fraud in the banking sector. Now, if those who caused hardworking Kenyans so much pain would be kept away in a small room with insufficient lighting for some time, that would be nice.

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TEMBEA KENYA 

Big wins for Kenya at World Travel Awards

SOMETIMES IT TAKES AN outsider to help you look at your home with fresh eyes. Sitting at the World Travel Awards in Zanzibar on Saturday night while one Kenyan company after another won awards, it was quite refreshing to see the Kenyan travel and tourism sector in that way.

For instance, the Serena Group of Hotels won more awards for their properties across the continent than I cared to count. Even the Kenya Tourist Board was named Africa’s best tourism promotion agency. Diani beach, Mombasa and Nairobi were all named leading destinations in their categories.

The biggest win of the night, though, must have been Kenya Airways, which was named Africa’s leading airline. It was just days after the carrier announced it was cutting 600 jobs as part of its turnaround strategy, Operation Pride. Marketing Director Chris Diaz maintained the airline’s product is strong and it will continue to fly high despite the challenges.

He pointed out that with the night’s best business class accolade, it had now won that same category for four years in a row. Online, some questioned the criteria for awarding Kenya Airways, perhaps because some Kenyans swear by foreign brands. Congratulations to all the Kenyan firms putting the country’s tourism on the global map.

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HUMBLE STAR

Successful but grounded, that’s Aloe Blacc 

ALOE BLACC SAYS HE ONLY achieved mainstream success at 31. The American singer/songwriter is incredibly calm and thoughtful when you speak to him.

“I loved his response to your question on Donald Trump,” Chief Justice Willy Mutunga told me at Aloe Blacc’s concert on Sunday.

He explained the rise of the phenomenon and pointed out that George W. Bush was elected, twice.

Ergo anything is possible in the United States, but for complex reasons that he was happy to explain. He didn’t give media-trained safe answers, but actual insight into his life, his musical choices and his activism.

When he gets on stage, his performance is what the kids call “lit” ,and quite a few remarked on his dancing. And to think that he only got well into full-time music after getting laid off from an office job. For a Grammy-nominated artist with a worldwide fan base, Aloe Blacc is one of the most grounded people I have ever met.