CMA boss grilled, MPs call for probe into billions lost at company

Wyckliffe Shamiah, the CEO of CMA. [Courtesy]

The National Assembly is set to form an inquiry into Cytonn and other entities where investors have lost billions of shillings.

This is as MPs yesterday turned the heat on the Capital Markets Authority (CMA) accusing it of failing to protect investors in Cytonn, Imperial, and Chase bank bonds among others.

National Assembly Finance and National Planning Committee Chairperson Gladys Wanga lamented that Kenyans had been left on their own with the regulator appearing helpless and shifting blame.

“You just came to tell us it has nothing to do with you,” said Wanga.

CMA was appearing before the committee after Garissa Town MP Aden Duale requested Parliament to probe the Authority, estimating that investors had lost about Sh36.8 billion due to CMA's negligence.

The grilling took over two hours and Wanga said it would progress into an inquiry where all regulators, including CBK and the various players in Cytonn and the other entities, would be summoned.

“This is just the beginning, our duty is to protect Kenyans and their investments. We need to bring these responses to the floor then we’ll call you (CMA) again as we begin our inquiry and make a report to the House on what we think should happen, and who should take responsibility for what,” said Wanga, who is also the Homa Bay Woman Rep.  

Wyckliffe Shamiah, the CEO of CMA, defended the institution, shifting blame to the judicial process, which was frustrating their mandate.

“Investigations have been done by us and even DCI. However, I have an order, which says you can’t take any action on Cytonn,” he said. CMA recently said it had opened investigations into Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN)— which have investments worth Sh13.5 billion.

Shamiah said “enforcement is expensive” with cases they had taken action on reversed by the courts, and they had to pay up.

“We are nearly auctioned through actions, which we take in good faith. I think we need protection,” said Shamiah.

He added that CMA was in a quandary where they were blamed when they did not take action and sued when they did.

Shamiah said some of the instances were private placements, where the CMA had no authority. These include the Sh4 billion Nakumatt Commercial Papers which CMA distanced itself from.

“Most of these players are usually doing these secretly,” he told MPs.

MPs put CMA on the spot on approving the Imperial and Chase Bank bonds only for the two institutions to go under after a short time. CMA shifted the blame on CBK, which is the banking regulator. "For us to approve the bond, we asked CBK and they gave us a no objection letter," said Shamiah on why they proceeded to give Imperial Bank a go-ahead to float its Sh2billion bond.

Shamiah said the Sh2 billion was still intact at the time of the bank's collapse and that the onus was on the Kenya Deposit Insurance Corporation (KDIC) to pay investors since it was placed under receivership. 

He, however, said once in the purview of unregulated products they assessed the risk and warned the public, only to be sued later.