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Ex-Director slapped with KES 2.5 million fine in Chase Bank bond saga

Brian Murimi by Brian Murimi
February 5, 2024
in News
Reading Time: 2 mins read

The Capital Markets Authority (CMA) Tribunal has upheld sanctions against a former Chase Bank Kenya executive for his role in misleading investors prior to the bank’s collapse in 2016, it emerged today.

Laurent Demey, managing partner of private equity firm Amethis Africa Finance Limited, was fined KES 2.5 million by the CMA last August for failing to provide proper oversight of Chase Bank’s management. This culminated in the publication of false and misleading financial statements in the Information Memorandum for a KES 10 billion Chase Bank bond issued in 2015.

Demey appealed the fine, but the Tribunal dismissed the appeal in its entirety today. It ruled that as a Chase Bank non-executive director from 2013 to 2016, Demey was responsible for allowing the publication of inaccurate information that misled bond investors.

“It is evident that the Appellant’s actions or lack thereof resulted in inaccurate disclosures and publications which were relied upon by investors and other stakeholders,” the Tribunal stated in its ruling. “Consequently, this resulted in investors, stakeholders and depositors in the institution suffering harm.”

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The bond was listed on the Nairobi Securities Exchange in June 2015 after Chase Bank notified the CMA of the successful issuance of the first KES 3 billion tranche. But less than a year later, Chase Bank collapsed and was placed under receivership by the Central Bank of Kenya in April 2016.

The CMA launched investigations into the bond the following year, finding that Chase Bank’s accounts were falsified prior to the bond’s issuance. This allowed the troubled lender to misrepresent its financial position to investors.

As a Chase Bank director, Demey would have been responsible for scrutinising the bank’s accounts before approving the Information Memorandum. The CMA determined that he failed in this duty, contributing to the publication of the misleading statements.

In addition to the fine, Demey must also cover the costs of his failed appeal against the CMA’s sanctions. The Tribunal said the penalty was appropriate and in line with Kenyan law.

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Brian Murimi

Brian Murimi

Brian Murimi is a journalist with major interests in covering tech, corporates, startups and business news. When he's not writing, you can find him gaming, watching football or sipping a nice cup of tea. Send tips via bireri@thesharpdaily.com

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