The Capital Markets Authority has cleared a former director of collapsed Imperial Bank of wrongdoing in the lenders’ issuance of a Sh2 billion corporate bond just one month before its collapse.
Chris Diaz had argued in his defense that he joined the bank as an independent and non-executive director after the decision to issue the bond was made.
Mr Diaz appeared before the CMA’s ad hoc committee that the regulator constituted to investigate the matter after he broke ranks with fellow directors, who rejected the CMA’s role in the matter.
Eight Imperial Bank directors, including Alnashir Popat, Omurembe Iyadi, Jinit Shah, Anwar Hajee and Hanif Somji, declined to appear before the committee arguing that Section 11(3)(cc) & (h) of the CMA Act is unconstitutional because it allows the regulator to play overlapping roles.
They appealed the regulator’s decision to include its board members in the investigating team arguing that the committee was unlikely to be impartial because of its membership.
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The CMA Tribunal on Wednesday issued an order stopping the Capital Markets Authority (CMA) from pursuing Imperial Bank directors over the Sh2 billion corporate bond scandal with the committee as constituted.
The CMA commenced investigations into the directors’ role in the bond scam following the Supreme Court’s December directive affirming the regulator’s authority in the matter. The CMA wants to investigate circumstances in which the bank issued the bond despite the directors’ knowledge that it was in trouble.
The Supreme Court had in its decision asked the regulator to form an independent unit to look into the directors’ claim that the investigation would not be fair citing the presence of two individuals in the CMA board whose impartiality they doubted.
Other Imperial Bank Limited (IBL) directors declined to appear before the Ad Hoc committee and filed an appeal at the Capital Markets Tribunal. Membership of the ad hoc committee included, retired Chief Justice Willy Mutunga, James McFie, Ms Anne Eriksson and Ms Patricia Kiwanuka.
Two CMA board members Thomas Kibua and John Birech were also appointed to sit in the committee, drawing protest from Imperial Bank directors.
The Imperial Bank directors went before the Supreme Court after the Court of Appeal allowed the CMA to pursue them over the bond scam – as the legally constituted licensing and enforcement agency.
The CMA is pursuing the directors for abetting fraud and breached the fiduciary duty to depositors.
