A lobby group representing the interests of Imperial Bank depositors yesterday admitted that it may have been used by Central Bank of Kenya (CBK) to cover up the banking regulator’s complicity in the Sh38billion theft of depositors’ funds at the bank.
Through its social media accounts on facebook and twitter, the group yesterday said it may have been used without its knowledge to divert attention from corruption at CBK.
“Was it a public relation stunt by CBK to divert attention from possible corruption within CBK and that the lobby group was intentionally used to enforce the CBK/Kenya Deposit Insurance Corporation (KDIC) public relation agenda (without its knowledge)?” the lobby wondered on its twitter handle.
On facebook, the group’s page administrator said it would change its tactics in its fight for the depositors’ rights and would start to hold demonstrations at the office of Director of Public Prosecution to force action on CBK officials said to have helped in the banking fraud that pushed Imperial Bank into receivership.
Imperial Bank was placed under receivership in October 2015 after the bank’s non-executive directors discovered a fraudulent scheme that had been executed for 13 years by its former managing director Abdulmalek Janmohammed with support of senior CBK banking supervision officials in which Sh38 billions of depositors funds.
The admission by the lobby group known as IBL Depositors’ Lobby Group comes at a time when some of the big Imperial Bank depositors are discovering that KDIC gave them a raw deal.
According to the KDIC Act, the amount payable to depositors for every insured deposit should not exceed Sh100,000. After that, KDIC should pay depositors on pro rata basis depending on recoveries it has made.
In the case of Imperial Bank, KDIC allowed small depositors to have access to 100 percent of their funds with a higher ceiling of Sh1million while big depositors accessed as low as 0.01 percent of the savings in a uniform payout of Sh1 million.
Essentially what this means is that the big depositors, most of who are members of the lobby group, will be the big lossers if the Imperial Bank recovery plan proposed by CBK in June last year fails in which case the bank will be put under liquidation.
A one year extension of the receivership granted by the High Court in July last year to provide room for a 48 week recovery plan proposed by CBK comes to an end in the next five weeks. But the recovery plan is five months behind schedule.
CBK is yet to announce the investor that it has selected to take over the bank which it should have done by end of January this year.
The admission by the lobby group was triggered by a candid letter by one of its members challenging the group’s leadership decision to give unconditional support CBK and Kenya Deposit Insurance Corporation (KDIC) in the last 32 months of Imperial Bank receivership.
In the letter posted on the group’s facebook page, the unnamed depositor says the depositors have nothing to show for the unconditional support the group has given to CBK and KDIC and that all their support added to CBK public relation campaign to divert attention from possible corruption at the apex bank in regard to Imperial Bank.
“In my opinion, since that time, the depositors have no tangible updates as to how far the CBK/KDIC has got with the recovery process. I am convinced that this was a public relations stunt by CBK to divert attention away from possible Corruption within CBK and that the Lobby Group was intentionally used to enforce the CBK/KDIC public relations agenda (without its knowledge),” says the anonymous depositor in the letter.
Evidence from a forensic audit at Imperial Bank showed that CBK top officials including former governor Prof. Njuguna Ndung’u and his wife received regular bribes from Janmohammed to look the other way or help cook the bank’s financial statements for the 13 years when the fraud was ongoing.
CBK officials named in the forensic audit report are yet to be prosecuted or punished in any way. In fact, some have been rewarded by CBK through promotions to bigger positions at the apex bank or appointment as receiver managers in Imperial Bank.
At the same tim, CBK governor Patrick Njoroge has sought to downplay the value of the forensic audit report to the point of denying that such a report has ever existed.
In his letter to the lobby group’s leadership, the anonymous depositor says in spite the group’s support to CBK and KDIC, the only thing the depositors have received from CBK are press releases of timelines for disposal of Imperial Bank assets which do not end up in concrete movement.
He says CBK’s complicity in the Imperial Bank saga and the new revelation to the effect that it slept on its job in the National Youth Service (NYS) scandal is an indication that the banking regulator is incapable to regulating the banking industry.
“We now read that CBK is entangled in the NYS Scandal as it claims that it did not know that 10 Banks had paid out large sums of cash money to alleged fraudsters. As Regulators we would assume that CBK would be on top of the banking Industry. It appears that CBK, by mandating Banks to fill in forms for Customers withdrawing Sh1million is giving nothing but lip service to Bank fraud. It is my understanding that in other countries, the regulator requires banks to call it (for action) if large amounts of cash are withdrawn,” says the depositor.