Central Bank of Kenya (CBK) employees have been linked to a scheme to defraud Imperial Bank, which has since been put under statutory management.
Former Imperial Bank Limited Chairman Alnashir Popat, while appearing before the National Assembly Parliamentary Committee on Finance, Planning and Trade, also turned up the heat on former Imperial Bank external auditors, PKF-Kenya, who played a role in the collapse of the lender.
The bank directors hit out at the receiver manager — the Kenya Deposit Insurance Corporation (KDIC) — for unfairly targeting them for prosecution when it was clear that they had no criminal liability.
Mr Popat told the MPs that there was grave conflict of interest in investigations by CBK.
"It has been demonstrated that senior officers of CBK were involved in the fraudulent activities that resulted in billions of shillings being siphoned out of the bank, eventually leading to the appointment of KDIC as receiver to take over the business and assets of the bank," said Popat.
He said the CBK has admitted publicly and explicitly that its officials were involved in this scam.
Popat was accompanied by Imperial Bank non-executive directors Hanif Somji, Anwar Haji, Jinit Shah and Omurembe Iyadi (independent director).
Lawyers Richard Harney, Njoroge Regeru and Andrew Wandabwa as well as Financial Consultant Ashif Kassam pleaded with the committee to push for the revival of the bank that went under seven months ago.
Asked by nominated MP Oburu Oginga what they wanted done, Popat told the committee that it is in the interest of the directors and shareholders, as is the CBK, to find a solution to save the bank, saying that liquidation was not the best alternative.
Mr Kassam noted that the fraud was made possible by the tampering of the bank's IT system, which allowed the late Managing Director Abdulmalek Janmohammed and his colleagues to hide the money within the bank, netting of liabilities and assets and automatically generating false reports.
"The bank reported a balance sheet of Sh52 billion in its last reporting with a loan book of Sh40 billion. However, after receivership, it was discovered that the deposits totalled Sh85 billion," said Kassam.
Popat noted that based on the affidavits filed in court by KDIC, the shareholders now strongly believe that the fraud quantum is significantly smaller than what CBK has publicly acknowledged.
Popat requested the committee to invite FTI Consulting to establish the bank's true state of affairs.
