The Ethics and Anti-Corruption Commission (EACC) is investigating former and current Central Bank of Kenya (CBK) officials for their role in the multi-billion shilling accounting fraud that felled Imperial Bank.
EACC deputy chief executive Michael Mubea said yesterday investigations into the activities of the unspecified number of people were ongoing and those found culpable would be arraigned.
“We are probing the officials and hope to conclude the process soon,” Mr Mubea said in an interview, adding that the probe involves a mix of old and current staff. He spoke days after Director of Public Prosecutions (DPP) Noordin Haji announced that an ongoing inquiry into the activities of Imperial Bank officials had extended to CBK officials.
“All the banks that have had problems with depositors’ money have had their senior management, and in some cases directors, charged in court. With specific regard to Imperial Bank, that is, Criminal Case number 478/2016, the senior management have been charged together with the directors for loss of Sh29 billion,” said Mr Haji.
“We are not only pursuing the directors and the management but also central bank officials, who allowed this to happen despite numerous inspections,” he said, insisting that Imperial Bank’s collapse is a case of great public interest that also reveals the extent of corruption in the private sector.
The latest revelation piles pressure on the banking regulator, who has in the recent past denied laxity or possible involvement of its officials in the Imperial Bank fraud.
Two other banks Chase (which has since been reopened after it was bought by Mauritian lender SBM group) and Dubai Bank fell in similar circumstances.
The CBK appointed the Kenya Deposit Insurance Corporation (KDIC) as receivers of Imperial Bank in October 2015 following its collapse amid revelations that up to Sh34 billion of shareholder deposits had gone missing.
CBK governor Patrick Njoroge has in the past promised that any CBK officials implicated in abetting malpractices at either Imperial Bank or any other lender will face the full force of the law.
Dr Njoroge’s promise has, however, not yielded any known action against CBK staff suspected of colluding with Imperial Bank managers to steal customer deposits. In June 2016, Imperial Bank directors sensationally claimed that senior CBK officials, who were complicit in fraudulent transactions, had become an obstacle to the bank’s restructuring and revival as part of a cover-up.
“It is plainly obvious that such complicit officers cannot be entrusted with the investigations which, if properly conducted, would unearth and expose their fraudulent dealings in cahoots with former group managing director Abdulmalek Janmohamed and senior employees of the bank,” said Imperial Bank chairman Alnashir Popat.
Mr Popat told Parliament that CBK officers were obstructing effective investigations into the mega fraud that precipitated the collapse of the bank, and were pressing for its liquidation to cover their tracks.
“These officers have effectively manipulated the receivership process so as to deflect attention and protect themselves,” he told the National Assembly’s Finance committee.
Earlier in February 2016, the former directors of Imperial Bank claimed in court papers that Abdulmalek Janmohamed, who passed away in September 2015, maintained an “inappropriate” relationship with former CBK Governor Njuguna Ndung’u.
“Indeed, the relationship was one of collusion and corruption and there are emails confirming without doubt that the former governor of the CBK was compromised by the former group managing director through improper gifts extended to him,” said Mukesh Kumar, a top shareholder in the bank, in the documents.
Prof Ndung’u’s wife is named as having received gifts from Mr Janmohamed, as part of a calculated scheme to co-opt the banking sector regulator into abetting a massive fraud that crippled the lender.
Mrs Nancy Ndung’u was at one time reported to have billed Mr Janmohamed for her stay with a companion at a luxury resort in Thailand.