CMA goes after ex-CEO Ciano for role in Uchumi mess


Jonathan Ciano

The Capital Markets Authority (CMA) has taken stern action against former Uchumi Supermarkets Chief Executive Officer Jonathan Ciano as well as five past directors and board members for their involvement in the retailer’s financial mismanagement.

The regulator has imposed a Sh5 million fine on Mr Ciano and is also seeking to recover Sh13.5 million from him as profit from illegally supplying Uchumi with goods.

CMA has also banned him from serving in any capacity for a listed firm for a period of five years.

A forensic audit conducted by audit firm KPMG revealed that Mr Ciano’s wife was a supplier of fresh produce raising the conflict of interest.

Despite the obvious conflict of interest, the former CEO also cleared over invoiced payments while allowing her to continue supplying the supermarket.

“On findings of conflicts of interest, the former CEO was established not to have disclosed his conflict of interest involving USL business partners,” CMA said in a statement.

The capital markets regulator said Mr Ciano was particularly culpable of misleading the board and shareholders of Uchumi’s financial strain leading to its near collapse.

Those also fined by the CMA include former Chief Financial Officer Chadwick Okumu, board directors James Murigu, Bartholomew Ragalo as well as chairperson Khadija Mire.

The CMA has disqualified Mr Okumu from holding office as a CFO, director or key officer of a public listed company and/or issuer, licensee or any approved institution of the Authority for a period of two years.

Ontop of being disqualified from holding any position in a public company, Ms Mire, the regulator is also seeking to recover Sh1.77 million which was paid as board allowances between 2014 and 2015.

“Ms Mire was also directed to attend Corporate Governance Training to be eligible for appointment as a director in a listed company in future,” said the CMA.

The regulator is said to be cracking the whip following a directive from President Uhuru Kenyatta to hold all those responsible for the decline of Uchumi to account.

Uchumi is seeking a Sh2 billion bailout from the government, which has been kept on ice pending the outcome of the inquiry.

The CMA is holding the board accountable for failing to provide proper management oversight.

During the retailer’s 2014 rights issue, the CMA inquiry found that changes were made to the Information Memorandum (IM) painting a flimsy picture of the retailer’s financial health.

The regulator also established that the IM was also tweaked, changing the original use of funds raised from shareholders.

“The published Uchumi rights issue IM was established not to have been updated with the material developments at Uchumi necessary to give investors the full picture of the impact of the funds raised through the rights issue. These omissions related to branch expansion activity commenced changes in business strategy, drawing down of undisclosed loans from financial institutions,” the regulator said.

Faida Investment Bank, which was the lead transaction advisor for Uchumi’s rights issue, has at the same time been suspended from offering transaction advisory services for a period of six months.

CMA has at the same time lodged a complaint for the commencement of disciplinary proceedings by the Institute of Certified Public Accountants of Kenya (ICPAK) against Mr Ciano and Mr Okumu.

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