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Double trouble for shamed former Uchumi directors

BUSINESS
By Dominic Omondi | November 24th 2016
By Dominic Omondi | November 24th 2016
BUSINESS
The CMA ruled that Ciano will be out for five years and Okumu two years. In addition, Ciano will be required to refund the cash-strapped retail store Sh13 million he fraudulently obtained from Uchumi.PHOTO: COURTESY

More trouble awaits former Uchumi Supermarkets directors after the Capital Markets Authority (CMA) revealed yesterday it was also pursuing criminal charges against them.

CMA Chief Executive Officer Paul Muthaura said they were working with the Directorate of Public Prosecutions (DPP) to bring criminal charges against former CEO Jonathan Ciano and finance manager Chadwick Okumu.

“We are working with the DPP on certain aspects of those investigations. Once they are completed, and there is sufficient grounds for criminal prosecutions, the DPP is the one empowered to take those actions,” said Mr Muthaura.

Last week, CMA banned the former Uchumi directors from holding positions in any listed public firms.

The CMA ruled that Ciano will be out for five years and Okumu two years. In addition, Ciano will be required to refund the cash-strapped retail store Sh13 million he fraudulently obtained from Uchumi.

Former Uchumi chairperson Khadija Mire was also disqualified from holding office as a director or any key position in a listed public company for a period of two years.

“Ms Mire was also directed to attend corporate governance training to be eligible for appointment as a director in a listed company in future,” said Mr Muthaura during the inaugural East Africa Investment Conference in Nairobi hosted by the Chartered Financial Analysts Society East Africa (CFA Society EA).

The conference discussed, among other topics, ethical issues in corporations including conflict of interest.

James Murigu, a former director, will be out of the boardroom for one year and will also return Sh660, 000 allowances he earned while serving on the retailer’s board.

OTHER CASES

For Bartholomew Ragalo, another former director, CMA disgorged board allowances of Sh855, 000 he earned in two years up to 2015.

And now the regulator says it is working with the DPP to penalise these managers for criminal offences, including fraud and abuse of office.

An audit report commissioned by the current board of Uchumi revealed the retail store might have lost as much as Sh900 million raised in a rights issue in 2014 to fraud, even as the retailer plunged into a Sh3.4 billion net loss.

Mr Muthaura said the Sh5 million penalty imposed on the perpetrators, which some people might feel is lenient, is based on the law.

“The maximum financial penalty the authority can introduce administratively is Sh5 million. That is capped by the law. So if Parliament were to change our laws to allow us to impose higher penalties, that would be a possibility,” he explained.

Muthaura said that the case against former Uchumi directors was the first in a line of many others that his office is working on.

He, however, could not reveal the other cases the CMA was working on.

“We do not comment on ongoing investigations. We do not comment on the work we are undertaking,” said Mr Muthaura.

 

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