Revealed: How CBK aided Imperial Bank directors rob depositors

10 Feb 2016 | by
Revealed: How CBK aided Imperial Bank directors rob depositors

A private forensic investigation by a London based finance company FTI Consulting has revealed how Central Bank of Kenya officials and senior Imperial Bank managers knowingly altered records to fleece depositors of billions of shillings.

The investigation commissioned by frustrated Imperial Bank shareholders following the death of the late Group Managing Director Abdulmalek Janmohamed in September 2015 reveals he instructed the bank's managers to pay out billions of shillings in loans without collateral or following established banking regulations.

Audited accounts were perused and doctored by CBK officials on instruction from Imperial Bank managers before being submitted to Imperial Bank's board. 

In one such incident via an email dated Friday October 24th 2014 at 1:01 pm, Imperial Bank Chief Finance Officer James Kaburu instructed CBK's Banking Supervision Reuben Cheres to delete specific entries in the bank's classified loans list before including them in record.

"Dear Reuben, Good afternoon. The highlighted in purple are the ones to be deleted. Classification of automotive solutions should change from doubtful to watch. Please send me the amended copy," the email reads Cheres.

Following Janmohamed's death on September 15 2015 of cardiac arrest, the then Head of Credit Naeem Shah and Chief Finance Officer James Kaburu were appointed Managing Director and Deputy Managing Director the next day.

Five days after their appointment, the two revealed that the late Janmohamed was responsible  for fraudulent disbursements that were kept from the Board of Directors.

They revealed that Janmohammed had over several years instructed and forced the Head of Credit to advance funds to certaiun clients without going through formal credit process.

"According to the CFO, the late Group Managing Director unilaterally forced, intimidated and threatened the CFO to use 'creative accounting' to hide what was effectively theft from the bank.

Emails and internet communication schemed from all bank employees computers revealed extensive communication between CBK officials and the collapsed bank's managers.

"The Board also received annual audited accounts authored by the managements of the Bank, which accounts had been duly audited by PKF Kenya (Certified Public Accountants), the duly appointed CBK approved auditor. These accounts were also duly approved by CBK which carried out intensive annual onsite inspections to verify the contents of the said financial reports," an affidavit filled by IBL shareholders says

An account in  W.E Tilley, account number 0102026004 had an overdraft of Ksh 446.9 million but was mysteriously reduced to Ksh 25.8 million.

"In August 2015 debit entries' interest liquidation' and Debit Interest on OD total Ks 446,997,331 thus increasing  the overdraft balance. On 27/08/2015 an entry with description 'New Loan' is seen for Ksh 460,345,235. This capitalisations reduces the overdraft (debit) balance from Ksh 486,244,465 to 25,899,230," the report says.

The actual list of top 50 largest borrowers from Imperial Bank Limited prior to its collapse reads like the who is who in Kenya's business community.

They include Adra International Ltd who owe Ksh 1.8 billion, Vegpro(K) Ltd with a Ksh 1.4 billion loan, Italbuild Imports Ltd with Ksh 1.2 billion, Scarce Commodities Ltd Ksh 1.1 billion, Samani Construction Ltd with Ksh 1 billion debt, Rods & Steel Limited Ksh 958 million loan, SK Amin LImited Ksh 763 million, Megha Industries (U) Limited with Ksh 723million loan, Coolxtreme with a Ksh 705 Million debt, RM Patel & Partners Limited with Ksh 676 million loan and Central Electricals Int'l Limited with a Ksh 605 million debt.

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