Imperial Bank directors link CBK employees to Sh38b fraud

The ongoing drama of the fraud at Imperial Bank took a new twist on Wednesday when directors and shareholders moved to court linking Central Bank of Kenya (CBK) and Kenya Deposit Insurance Corporation (KDIC) employees.

In a suit filed at the High Court, the directors three CBK and one KDIC employee of playing a major role in concealing the fraud that saw the bank lose an estimated Sh38 billion shillings.

Former CBK Governor Prof Njuguna Ndung’, Ronald Geoffrey Langat and Ruben Cheres are the regulator employees the directors say were aware of the fraud run by former managing director Abdulamek Janmohammed.

The directors have also linked former KDIC Managing Director Peter Gatere as part of the group determined to cover up CBK’s involvement in the fraud.

In the court papers, the directors draw attention to a string between Mr Gatere and former Imperial Bank Chief Finance Officer and Deputy CEO James Kabura which they say was used to alert the fraud conspirators of the regulator’s every move.

“This private correspondence of such serious and damning allegations confirms beyond doubt that the fraud perpetrated at the bank was a direct result of the collusion between officers of the CBK and senior management at the Bank,” the suit reads.

Imperial Bank was placed under receivership on October 13 2015 after directors brought to the attention of the central bank of a massive fraud scheme.

The directors have for the better part of a year cried foul over the handling of the bank’s receivership with concerns that the regulator could be covering up the fraud.

The directors claim that Mr Janmohammed maintained an inappropriate relationship with CBK’s former governor Prof.  Ndung’u saying such relationship was collusion and corruption meted on the bank arguing that there are emails communication to the effect.

The case has also roped in Prof. Ndung’u’s wife.

In bank statements presented to court, Nancy Ndung’u is shown to have at one time billed Mr Janmohammed for her stay with a companion at a luxury resort in Thailand.

The filing of the suit comes just two weeks after CBK and KDIC moved to freeze the assets of the directors and shareholders as well as recover Sh45 billion from them.

The directors have however opposed the move, arguing the regulator has flouted due diligence in presenting against them linking them to the loss of funds from the bank.

“A hearing cannot be said to be fair where one party has been denied the right to see documents which form the basis of the complaint made against it,” the directors say in their counter suit.

the directors had hired FTI Consulting to carry out the forensic audit on the bank before being appointed by the regulator to carry out extensive investigations.

Directors and shareholders argue that efforts to revive the bank have been thwarted by the central bank which they say are keen on having the bank liquidated.

Shareholders had in 2015 proposed to inject Sh10 billion into the bank, recover stolen assets and bring on board a strategic investor to recapitalize the bank allowing it to reopen.

The central bank has since extended the receivership period for Imperial Bank by six months to allow KDIC safeguard customer funds.

The CBK in June appointed NIC Bank to manage assets and liabilities of the troubled bank.