Central Bank of Kenya’s fear of releasing Imperial Bank’s financial statements during the time of receivership, as well as the forensic audit of the Sh38 billion fraud could be the biggest impediment to the reopening of the bank, Money & Market can report.
We have established that nearly two years after Central Bank of Kenya (CBK) officials walked in and placed it under receivership, Imperial Bank depositors and shareholders are still in the dark about the state of the bank.
Instructively, the failure to provide access to the bank’s state of affairs was the deal breaker in the first recovery plan drawn by the bank’s non-executive directors and shareholders.
CBK has issued a 48-week programme of activities that will pave way for lifting of the receivership and subsequent reopening.
During the first recovery plan in 2015, shareholders had offered to inject Sh10 billion to give the bank a new lease on the condition that the CBK would allow for an independent due diligence on the institution.
A trail of letters and audio recordings from the various depositors meetings we have looked at show that both depositors and shareholders have made numerous requests for the state of the bank’s affairs during the time of the receivership but CBK has ignored the requests or failed to respond.
CBK has also turned down requests for a report of the forensic audit conducted on the bank by an international consulting firm FTI Consulting.
As late as last month, CBK was adamant that it had no intention of releasing the statement of the affairs of the bank despite a court ruling that the bank’s stakeholders such as depositors, shareholders and bond holders had a right to the information on the bank’s state of affairs.
In a meeting with CBK governor Patrick Njoroge last month, depositors took the regulator to task over the failure to them information on the bank’s state of affairs.
The governor had called the meeting to seek depositors support for a recovery progress that will see the bank sold to investors in a period on one year.
But the depositors to the governor that CBK was asking too much and yet giving so little.
“Mr. Governor my fellow depositors, I think in real sense what he says is that KDIC has been very uncooperative. You’ve been asking us to support you, we have supported you. You’ve asked for our cooperation, we have cooperated with you. KDIC has actually been the biggest (stumbling block) between CBK and the depositors. We have written letters, those letters are not being replied. So what are those staff I mean what is the staff doing there?” said the depositor.
This news site has a copy of a letter that the depositors sent to KDIC last year asking to be furnished with the financial statements. KDIC did not respond.
Another depositor pressed the governor hard for the bank’s book of accounts insisting it was the depositors’ right.
“As depositors, I think it’s sort of our interest that we get from CBK or KDIC the books of accounts of Imperial Bank. We need to know, at the time of the close up what was the status of accounts and as now,” said a depositor in the June 28 meeting at Intercontinental Hotel in Nairobi,”
In a curious occurrence, Njoroge forgot to answer the question even though he was writing down all the questions in a notebook.
Not discouraged by the governor’s failure to say whether he will release the financial statements, the depositors dug further this time demanding the forensic audit report.
“Mine is only one and it’s about the FTI consulting report. We may talk about it in the case but the (inaudible) is always in the details and whoever the investor is taking over will tell what is contained in that report. That report has been mentioned in the press because we know (inaudible) as depositors we have not seen that copy. I think the media has and I think you are pushing us to the side… My request is this; in the next press release we can have a copy,” said another depositor.
Strangely, Njoroge told depositors that there was not such a thing as an FTI report, although the forensic audit firm has been working for the last 640 days in which time it had been paid over Sh1.5 billion in consulting fees.
“The first thing to say is that there’s no such thing as a report, right? This sounds like a surprise. If you think you’ll get a 100 page report and maybe your lawyer said that 20 pages, 20, I don’t know 2,000 pages, no no no, it doesn’t work that way, the reason is the thing is really complicated is really huge, for instance, in one of the cases, the idea here is that there will be material for particular cases,” Njoroge told the depositors.
But this news site has seen a preliminary report of the forensic audit from which we have produced news reports in the past.
Njoroge said CBK does not want to release the FTI report because it may jeopardises 5 cases it has filed in court in an attempt to recover the stolen money.
Essentially what this means is that apart from CBK and Kenya Deposit Insurance Corporation (KDIC), nobody knows the current financial position of the bank even as the CBK starts the search for investors to buy the bank.
On Thursday this week, the High Court is expected to rule on an application filed by Central Bank to extend the bank’s receivership by 12 months within which it hopes to have found a buyer for the institution.