Kenya: Central Bank Seizes Sh8bn from Disgraced Chase Bank Directors
The Central Bank of Kenya has seized Sh8 billion (almost $80m) from Chase Bank directors who brought down the bank by gifting themselves interest-free loans.
The country’s banking regulator said on Thursday it had confiscated property acquired by the bank’s board members through the loans. CBK governor Patrick Njoroge said “we have to hold these people to account; the population will not accept that they just walk around scot-free.”
The directors implicated in the Chase Bank scandal were found to have awarded themselves 15-year interest-free loans under the guise of sharia-compliant lending. Those loans led to a string of irregularities in the bank’s finances, which eventually brought down the lender after expected payments didn’t come in when expected.
The Central Bank of Kenya (CBK) later consolidated those loans, allowing the bank to reopen on Wednesday. The bank was placed under receivership on April 7 – a big shock to the public – following rumours of the bank’s financial situation circulated on Twitter.
Financial irregularities being recovered
CBK governor Njoroge says almost half the money lost through these loans has now been recovered. He said the regulator had been working hard over the last two weeks to recover that money and condemned the actions of directors involved.
“There was no interest being charged on the missing Sh8 billion, no record of how you lent it. They did not want to use the word ‘lend’,” he said on Thursday. “Sh8 billion just went out the door liked that.”
However, Njoroge did commend the fact that Chase Bank was able to be reopened so quickly, thanks to the case being much simpler than the previous Imperial Bank closure.