CMA fines former Chase Bank bosses, Deloitte over Sh10bn loan

The Capital Markets Authority in Kenya has levied fines against Deloitte and former executives of Chase Bank over a fraudulent issuance of a 10 billion Kenyan shilling medium-term bond in 2015. The regulator found that Deloitte failed to detect a non-existent 2.1 billion shilling account at the Central Bank, which the bank falsely claimed to entice bond investors. Three former Chase Bank executives and five board members have been penalized for their alleged involvement in the scandal. In an interview with CNBC Africa, Legal and Policy Consultant James Mbugua shed light on the issue. Mbugua explained that Chase Bank had misrepresented its financial position by overstating its accounts by 2.1 billion shillings, leading investors to subscribe to the bond under false pretenses. The executives and board members involved were fined and prohibited from participating in the capital markets for a specified period. Deloitte was also fined for failing to carry out due diligence in the matter, highlighting the risks of collaboration or negligence in financial auditing. The scandal exposed the vulnerabilities in the banking sector, prompting calls for stricter regulatory measures by the Central Bank of Kenya. Despite the challenges, the banking industry has seen improvements in corporate governance since the collapse of Chase Bank and Imperial Bank in 2015. SBM Bank, which acquired Chase Bank in 2018, faces potential liabilities from the scandal, with former officials also facing legal repercussions. However, the bank has stabilized and is expected to navigate the financial implications while adhering to regulatory standards set by the Central Bank of Kenya.