The Capital Markets Authority has fined several directors of listed companies including the auditor over Sh8 million for breaching trading rules in the financial year ending June 30, 2023, new disclosures have revealed.
While the authority did not disclose the companies or individuals affected by the sanctions, it said that most of them settled the fines.
“During the relevant period, the Authority took enforcement actions against various persons or entities that violated the legal and regulatory framework,” CMA CEO Wycliffe Shamia said in an interview.
He added that “the Authority imposed penalties on a number of directors of listed companies and one of the auditors for violating the legal and regulatory framework, and as a result, most of them chose to settle the fine/penalty imposed on them.”
Disclosures in the Competition and Markets Authority’s latest annual report for 2022/23 show that the authority’s earnings from fines, penalties and fees increased more than eight-fold to Sh10 million from Sh1.12 million the previous year.
The Authority said it has taken initiatives to protect investors aimed at enhancing their confidence, including capital market investigations and implementation, an online whistleblower portal, email reporting, issuing alerts to investors and market arbitration.
The disclosures come on the heels of a decision by the Capital Markets Authority that allowed the Competition and Markets Authority to sanction four former directors and a current director of micro-lending institution Real People Kenya Ltd (RPKL) for their role in the illegal transfer of Sh1.6 billion bond proceeds to South Africa about nine years ago.
The lender raised Ksh1.6 billion in 2015 from Kenyan investors to issue loans to local clients, but the bulk of the money was transferred to its parent company in South Africa to repay an internal loan.
The Competition and Markets Authority Tribunal on June 5 dismissed an appeal by four former directors – Norman Ambunya, Daniel Ohondi, Nthenya Muli and Charles Cox – who sought to prevent an ad hoc CMA committee from holding hearings on the matter.
Ms Yvonne Godot, who still serves on the board of RPKL, is one of the people facing sanctions from the Competition and Markets Authority over her role in the scandal.
The Competition and Markets Authority’s investigations in 2015 revealed that the directors appeared to have breached certain provisions of the Code of Corporate Governance Practices for Issuers of Public Securities (2015) and the Capital Markets Act.
The regulator has fined four other former Real People directors a total of Sh15 million for their roles in diverting Sh1.6 billion in bond proceeds to South Africa.
This has landed nine former chairmen and directors – four Kenyans and five South Africans – in trouble with the regulator, which has ordered an investigation into the company.
Five of the nine executives opposed the regulatory action and moved to the Competition and Markets Authority court, while the other four were fined between Sh2.5 million and Sh5 million.
In addition to the penalties imposed on RPKL officials, Wycliffe Lindunga Kivonera, the former acting chief financial officer at the National Bank of Kenya (NBK), is facing a Sh1 million penalty by the Competition and Markets Authority for misconduct.
The former CFO had sought to block a disciplinary hearing against him over financial irregularities at the state-owned bank before it was taken over by KCB in September 2019. However, the Capital Markets Court on June 5, 2024, rejected the attempt.
The Competition and Markets Authority issued a show cause notice to Mr Kivonera in August 2017 following investigations into the affairs of NBK which revealed that the then acting CFO had deliberately prepared and published false and misleading financial statements of NBK by reporting a gain on disposal of assets of Sh847,920,000 for the quarter ended June 30 to September 30, 2015.
Investigations also found that Mr. Kivonera may have been involved in misappropriating NBK funds by commissioning deposit mobilization in 2014 and 2015 and irregularly restructuring and rebooking loans without the approval of the NBK Board of Directors to save the bank from incurring loan provisions obligations for non-performing loans amounting to Sh2,595,303,848.
According to the Competition and Markets Authority, Mr Kivunira also admitted and subsequently wrote off interest on non-performing loans amounting to Sh680 million, contrary to the provisions of the guidelines on corporate governance practices by listed companies.
Mr. Kivonera who was dismissed by NBK in April 2016 failed to provide the CMA Board with relevant, accurate and timely information to enable the Board to perform its duties resulting in a financial penalty of Shs1 million.
