April 5, 2018 / 7:39 AM / 10 months ago

Kenyan regulator fines ex-National Bank boss for loss of funds

NAIROBI, April 5 (Reuters) - Kenya’s market regulator has fined the former chief executive of National Bank of Kenya , Munir Sheikh, 5 million shillings ($49,504.95) in connection with the overstatement of the bank’s 2015 profit, the regulator said.

The mid-sized bank, which is majority-held by the state and the state pension fund, was caught up in a storm that engulfed the financial sector in early 2016, as the central bank stepped up scrutiny of commercial banks.

At the time, Sheikh and other executives were accused of overstating the bank’s profit in the first-half and nine-month periods of 2015, before the audited accounts for the full year showed a massive loss.

The regulator, Capital Markets Authority (CMA), also said it had received whistleblower information of a scheme to steal 1 billion shillings from the bank at that time, leading to an inquiry.

“The alleged embezzlement of funds was investigated in connection with a deposit mobilization program where commissions were paid to private agents for deposits placed by government agencies,” the CMA said on Wednesday.

Investigations had found that up to ninety percent of the commissions paid to the private agents may have subsequently been transferred back to persons related to the bank, the regulator said.

It disqualified Sheikh from sitting on the board of a listed firm or working for a licensed market participant for three years “for his role in the ineffective management of the bank.”

It also cited him for “failure to ensure the board was furnished with complete and reliable information and for the misrepresentation of the financial statements.”

Four other former executives, including the ex-treasurer and the ex-chief financial officer, were also hit with fines ranging from $10,000 to $1 million.

CMA said it had asked the office of public prosecutions to open charges against some of the individuals. It also said it had asked detectives to further investigate some of them. ($1 = 101.0000 Kenyan shillings) (Reporting by Duncan Miriri, editing by Larry King)

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