CMA
Reporting accountants Deloitte and Touche have been fined Kes10 million for their impropriety in the Chase Bank medium term note saga. Also fined by markets regulator are former senior bosses of the ill-fated bank.

The Capital Markets Authority (CMA) has taken disciplinary actions against former Chase Bank senior staff, board members and auditing firm Deloitte following the bungled issuance of Mid-Term Note (MTN) in 2015 which primarily led to the collapse of the lender.

Chase Bank’s managing director at the time, Mr Duncan Kabu got the most punitive reprisal, a Kes5 million fine and a 10-year prohibition from participating in any issues in Kenyan capital markets.

His counterpart, Mr Ken Obimbo, who served as finance director got a Kes5 million hit and was further barred from engaging in capital markets issues for five years.

Chase Bank CEO at the time Mr Paul Njaga was also slapped with a Kes5 million fine while Mr Anthony Gross, a board member, will be required to pay a fine to the tune of Kes2.5 million.

Other culpable board members were Mr Laurent Demey, Mr Rafiq Sharrif and Ms Muthoni Kuria who werefined Kes 2.5 million each. Mr Richard Carter was handed the lightest fine, Kes1 million.

The reporting accountants Deloitte and Touche were fined Kes10 million for their impropriety in the Chase Bank MTN saga.

Read also: Central Bank okays the wind up of Chase Bank

Slightly over seven years ago, CMA approved Chase Bank’s request to issue a Kes10 billion medium-term bond.

The bond proceeds were billed to go a long way in strengthening the bank’s capital base, and facilitate the expansion of her branch network, among other things. In the end, the bank attracted Kes4.8 billion from the capital markets.

A few months later, Chase Bank ran into liquidity headwinds and was unable to discharge its financial obligations as of April 2016.

Consequently, the Central Bank of Kenya (CBK) appointed the Kenya Deposit Insurance Corporation (KDIC) to be the bank’s receiver for a year.

The receivership prompted the immediate suspension of trading in the Chase Bank bond.

The unfolding of events at the beleaguered Chase Bank caught the attention of CMA which commenced investigations to establish the mechanics behind the collapse of the bank.

Following the inquest into Chase Bank, the CMA identified aberrations in the preparation of false and misleading financial statements, conflict of interest and the withholding of information.

Accordingly, the CMA issued Notices to Show Cause (NTCSs) to Chase Bank senior managers, board members and Deloitte, the bank’s auditor.

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