KenolKobil insider probe pushes CMA illicit recoveries to Ksh.726 million


Pedestrians walk past a Kobil service station with the prices display of petrol (US $ 0.84 per ...
Pedestrians walk past a Kobil service station with the prices display of petrol (US $ 0.84 per litre unleaded) and diesel (US $ 0.72 per litre) on a signage in Kenya's capital Nairobi, February 7, 2016. The global oil price is hovering at about $30 U.S. dollars a barrel. REUTERS/Thomas Mukoya

In Summary

  • Administrative actions involving 18 suspected accounts in the oil marketer's counter have resulted in the recuperation of a total Ksh.517.8 million with the balance coming from the indictment of the now suspended fixed income trader Rodrick Muhoro.
  • CMA had in the aftermath of the public announcement to the takeover flagged down suspect trading accounts, over irregular trading in the run up to the pronouncement of Rubis’s deal, in a probe that would later reveal a chain of insider dealings that supported the capture of close to 58 million KenolKobil shares on non-public investigation.
  • While the Capital Markets Authority has put out the administrative enforcements simply through press releases, the markets regulator has omni presently kept its prying eyes on market participants to sanction expeditiously sanction irregularities.
  • Proceeds captured from the market irregularities audits are expected to fund the CMA’s Investor Compensation Fund (ICF) a kitty that serves to insure investor funds from prevailing operational risks.

The Capital Markets Authority (CMA) has recovered Ksh.725.8 million from illicit capital markets dealings in the year to date, with the lump of the sum coming from the probe into KenolKobil insider trading.

Administrative actions involving 18 suspected accounts in the oil marketer’s counter have resulted in the recuperation of a total Ksh.517.8 million with the balance coming from the indictment of the now suspended fixed income trader Rodrick Muhoro.

The proposed cash offer for a 100 percent ordinary share capital of KenolKobil by the French based Rubis Energie on October 24, 2018 opened the door to the recent extraction of illicit gains from the undeserved transactions.

CMA had in the aftermath of the public announcement to the takeover flagged down suspect trading accounts, over irregular trading in the run up to the pronouncement of Rubis’s deal, in a probe that would later reveal a chain of insider dealings that supported the capture of close to 58 million KenolKobil shares on non-public information.

The capital markets regulator would on March 12 recover 90 percent of the quantum of suspicious trades represented by illegal gains totalling Ksh.458 million before recovering a further Ksh.19 million from five trading accounts on no contest settlement agreements.

The final instalment of recoveries was confirmed on July 8, 2019, this as the CMA disgorged a total of Ksh. 28.1 in undue gains from two stockbroking agents among them renowned stock broker and Rich Management Chief Executive Officer Aly Khan Sachu and Krestel Capital linked broker Kunal Bid.

CMA would further recover Ksh.2.5 million in fines to former Krestel Capital C.E.O. Andre Desimone and Ksh. 348,316 from dealings in associate accounts in addition to the repossession of Ksh.9.9 million shillings from Krestel Capital by way of non-contest.

The CMA had in the intermediating time in May recovered a total of Ksh.208 million in fines from fixed income trader Rodrick Muhuro over the determined front running of deals described as the placement of orders ahead of clients with a means to profit from prior knowledge on price differentials.

Big brother watching

While the Capital Markets Authority has put out the administrative enforcements simply through press releases, the markets regulator has omni presently kept its prying eyes on market participants to expeditiously sanction irregularities.

In line with serving its mandate to preserve market integrity and conserve investor confidence in the capital markets, the CMA has furthered its investments under the 2014-2023 Capital Markets Masterplan.

At the end of March this year, the regulator for instance embarked on the procurement of a robust and scalable multi-asset surveillance system as a means to monitor market activity across various asset classes under the wave of new products integration.

Further, the CMA has established an anonymous reporting portal while installing building blocks for the amendment of the Capital Markets Act to include a three percent reward on recovered amounts capped at Ksh.5 million even as the sector regulator eyes closer ties with investigative agencies.

“We are working closely with the Judiciary and other arms of government to fast tract the conclusion of court cases, and pursuit of criminal investigations around enforcement actions,” said CMA Chief Executive Officer Paul Muthaura on March 28, 2019.

CMA did on the same month setup the Financial Markets Law Review Panel- a key advisory to its board to ensure the capital markets law remains responsive to market realities and manage evolving expectations both locally and externally.

“The panel will serve a critical reference for the Authority with regard to the early identification of potential legislative gaps on challenges that could affect the functioning of the capital markets including a consequence of ancillary legislation, and proposed legal and regulatory reforms,” added Mr. Muthaura.

Some of the key appointees the board include Bowmans Coulson Patner Paras Shah, Chairman to the Kenya Law Reform Commission Mbage Ng’ang’a and Former Director of Compliance in the United Kingdom and the European Union Louise Kabucho.

Proceeds captured from the market irregularities audits are expected to fund the CMA’s Investor Compensation Fund (ICF), a kitty that serves to insure investor funds from prevailing operational risks.

For Citizen TV updates
Join @citizentvke Telegram channel



Video Of The Day: Nairobi County proposes higher taxes for city residents

Avatar
Story By Kepha Muiruri
More by this author