KENYA – The Capital Markets Tribunal has rejected an application by the Capital Markets Authority (CMA) to consolidate two cases involving senior officials of Kakuzi accused of irregular payments from the agricultural firm to companies they formed without disclosing their interests.
The tribunal, chaired by Paul Lilan, stated that despite the cases arising from the same transactions, the different processes followed by the CMA could lead to different appeals.
The CMA had summoned Managing Director Christopher Flowers separately before issuing a notice to show cause letter to eight other directors of Kakuzi. The regulator sought to consolidate both appeals to save time and costs.
However, the tribunal ruled against consolidation, stating it could muddle up issues for determination in both appeals. The tribunal also disagreed that success in one appeal would directly translate to success in the other case.
The officials summoned include Nicholas Ng’ang’a, Graham Harold Mclean, Andrew Ndegwa Njoroge, Ketan R. Shah, Daniel Ndonye, Stephen Waruhiu, John Kimani, and Benjamin Okiring.
The CMA alleges that these officials entered contracts with companies for services without disclosing their ownership and directorship interests.
The tribunal also declined two minority shareholders, Steven Kimani, and Daniel Kimotho, from participating in the appeal, stating they did not demonstrate an identifiable legal interest.
In response to the ongoing investigations, CMA has dispatched show cause letters to all board members of Kakuzi.
The investigation involves allegations of financial impropriety, including the formation of companies and approval of millions of shillings in payments to these entities without disclosure of interest.
The CMA’s report alleges irregular and unsupported payments totaling Sh320.9 million for management services support between January 1, 2018, and March 10, 2021.
Kakuzi Managing Director Chris Flowers declined to respond to queries, citing the matter being pending before the Capital Markets Tribunal.
The investigation into Kakuzi’s financial dealings draws parallels to a similar probe a decade ago into directors of CMC Holdings, revealing evidence of siphoning company funds through secret offshore accounts.
The CMA, in response to ongoing investigations, stated, “The matter is under our review, and because of data protection laws, we cannot discuss it.”
The completion of the tribunal process, subject to regulatory approvals and customary closing conditions, is anticipated in the first half of 2024.
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