CAPTION: Kenyan entrepreneur business leader and conservationist, Chris Diaz – His role in the collapse of Imperial Bank has been largely understated
Six years after investors lost billions, the aftershocks of Imperial Bank’s sudden collapse continue to reverberate across the banking industry.
The saga slowly began early as 2012, when a whistleblower raised a red flag about possible money-laundering and tax evasion through an email to the then Kenya Anti-Corruption Commission (KACC), The Treasury and the Central Bank of Kenya (CBK) among other government agencies.
On receiving the damning allegations, Richard Cheres of CBK shared this information with James Kaburu, the then Chief Financial Officer (FCO) at Imperial Bank and demanded for more details on the bank’s top 50 largest borrowers.
However, Kaburu in his response to Cheres denied any money-laundering or tax evasion being perpetuated at the bank.
Three years later, Imperial Bank was placed under receivership.
On September 21, 2015, exactly one week after the Group Managing Director Abdulmalek Janmohamed suddenly passed away, news emerged that there had allegedly been sustained financial statement fraud at Imperial Bank since 2006.
More shocking was the fact that the said crimes had been perpetrated by Abdulmalek Janmohamed himself, with the help of a few senior members of the bank’s management.
Also under his payroll were top Central Bank of Kenya (CBK) officials, including the former Governor Njuguna Ndungu and his juniors who were crucial in the entire blockchain process that saw over Sh34 billion squandered.
What followed was the usual: forensic investigations, back and forth court cases, judgements, appeals, customer demonstrations, and eventually, the bank’s liquidation.
For endless months, large depositors at Imperial Bank did all they could to get back their money to no avail.
Each passing day, the intensity of their frustrations heightened as many began to come to terms with the painful reality of possibly never recovering their money.
On the other side, rogue Imperial Bank officials and CBK officials who conspired to steal from depositors continued to roam free.
But the recent wake of the Capital Markets Authority (CMA) finally commencing enforcement hearings against the bank’s former directors provides an opportunity to shine the light on some of the various persons of interest who previously managed to avoid the spotlight.
Chris Diaz’s quiet escape from Imperial Bank saga
One such man believed to have managed to quietly buy his freedom from the scandal is renowned Kenyan entrepreneur business leader and conservationist, Chris Diaz.
To many people, Diaz cuts the image of a successful businessman, sales and marketing guru, environment conservationist and corporate dealmaker.
This is no surprise given his expansive CV as a former KQ Sales and Marketing Director, member of the Brand Kenya Board and now Bidco sales and marketing director.
He was also recently awarded the Head of State Commendation (HSC) by President Uhuru Kenyatta and has received other numerous honours for his good work.
But another one of his previous jobs which are hardly ever talked about was his role at collapsed Imperial Bank where he served as an independent and non-executive board member until 2016.
Diaz is also is a personal friend and close business associate to tax evader Vimal Shah, CEO of Bidco.
Over the years, Vimal Shah has managed to influence policy in favour of private sector industrialists much to the delight of the Asian community in Kenya which, unsurprisingly, dominate the manufacturing and retail sectors in the country.
Vimal Shah has had the eyes and ears of presidents – from Daniel Moi and Mwai Kibaki and now, Uhuru Kenyatta, to Yoweri Museveni of Uganda, where the company has set up a manufacturing plant.
In simple terms, you just can’t talk about corporate Kenya and fail to mention Vimal Shah.
Diaz and Vimal’s tight relationship could perhaps be explained by the fact that despite all the success that BIDCO has brought the family, their Sales and Marketing department has played the biggest role to achieve this.
And the man behind that wheel is none other than Christopher Diaz.
So, when trouble came knocking after Imperial Bank’s demise in 2015, Vimal Shah – with the influence and power of the 34th richest family in Africa – he couldn’t allow for Diaz’s crucifixion.
For this, he was willing to go to the furthest lengths, including pocketing crooked and greedy board members at CMA which at the time included one Thomas Kibua, John Birech, as well as now-retired Chairman James Ndegwa.
The tenure of billionaire businessman James Ndegwa at the Capital Markets Authority (CMA) came to an end on 13th April 2021 bringing to an end to his six-year term that was marred with conflict of interest accusations.
At the time of his exit, he was facing a court case by activist Okiya Omtatah challenging his reappointment to the board in 2018 on allegations of conflict of interest.
Mr Ndegwa, son of former Central Bank of Kenya governor Phillip Ndegwa, and his brother Andrew Ndegwa have built a multibillion business empire including First Chartered Securities Ltd and ICEA Asset Management Ltd, NCBA Group and Unga Group spanning banking, milling, insurance and real estate.
Mr Ndegwa is the chairman of First Chartered Securities — the holding company for many of the firms associated with the late Philip Ndegwa family — and a director of several companies which he regulates.
Corrupt CMA
On the first day of the enforcement proceedings by the Capital Markets Authority (CMA) only one former board member – Mr. Christopher Diaz – attended the hearings.
Mr Diaz appeared before the CMA’s ad hoc committee after he broke ranks with fellow directors, who rejected the CMA’s role in the matter.
Eight other Imperial Bank directors, including Alnashir Popat, Omurembe Iyadi, Jinit Shah, Anwar Hajee and Hanif Somji, declined to appear before the committee arguing that Section 11(3)(cc) & (h) of the CMA Act is unconstitutional because it allows the regulator to play overlapping roles.
Membership of the committee included; retired Chief Justice Willy Mutunga, James McFie, Ms Anne Eriksson and Ms Patricia Kiwanuka.
Two CMA board members Thomas Kibua and John Birech were also appointed to sit in the committee, drawing protest from the other Imperial Bank directors.
They appealed the regulator’s decision to include its board members in the investigating team arguing that the committee was unlikely to be impartial because of its membership.
In his defence, Chris Diaz argued that he only joined the bank as an independent and non-executive director after the decision to issue the bond was made.
Therefore, the ad hoc committee did not find it necessary to take any action against him.
Christopher served as an independent and non-executive board member from 1st February 2015 and 13th October 2015.
But according to a statement by CMA, Imperial Bank applied to issue a KSh2 billion corporate bond on 30 April 2015 and the regulator approved the issuance on 12 August 2015.
The bond offer period opened on 24 August 2015 and closed on 17 September 2015.
Technically, it is true that Mr Diaz joined in February when the process was already underway before the bank’s application for authorization by CMA in April but according to reliable sources within the bank, he was made aware of the status quo and was briefed on all the ongoing developments just like the rest of the directors.
Surprisingly, he did not act against the process and instead joined the bandwagon in allowing the bond issuance to proceed.
The consequences were catastrophic.
In such scenarios, loans and such bonds are usually authorized by the bank’s Board Executive Committee (BEC) comprising the chairman, the group managing director and three non-executive directors, one of whom was none other than Chris Diaz.
However, Capital Markets Authority suspended the listing of the corporate bond on the Nairobi Securities Exchange in October 2015 and notified the Kenya Deposit Insurance Corporation and the Central Bank of Kenya about the suspicious activities at the bank.
With the presence of such a powerful force behind him, finding Chris Diaz culpable of any crime was a mission dead on arrival.
In the meantime, investors, some of them impoverished after losing all their life savings, continue to cry out for justice.
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