Kenya Police Orders Arrest of Chase, National Bank Directors

  • Six directors from National Bank, two directors from Chase
  • Central bank, Treasury reassure on stability of banking system

Kenya’s police chief ordered the arrest of eight commercial bank directors, six of them from National Bank Ltd. and two from Chase Bank Kenya Ltd., over alleged unethical conduct.

The officials include National Bank’s Managing Director Munir Sheikh Ahmed and Chief Finance Officer Chris Kisire, and Chase Bank Chairman Zafrullah Khan and Group Managing Director Duncan Kabui, Police Inspector-General Joseph Boinnet said in a statement published on the Interior Ministry’s Twitter account on Friday.

“Following the announcement by the governor of the Central Bank of Kenya regarding unethical conduct by certain bank directors and managers, I have therefore ordered the arrest,” Boinnet said.

Three Kenyan lenders including Chase Bank have been taken over by regulators since Central Bank Governor Patrick Njoroge was appointed in June. Imperial Bank Ltd. was seized by the regulators in October, while Dubai Bank Kenya Ltd. went into liquidation in August after running out of money.

Njoroge and Treasury Secretary Henry Rotich earlier on Friday sought to reassure Kenyans that the country’s banking system is sound. The central bank won’t tolerate “rogue bankers” that defraud depositors, he said, without identifying anyone.

Forced Leave

National Bank on March 30 placed Ahmed and five other top managers on forced leave pending an internal audit. A day later, the state-owned lender reported a full-year loss of 1.15 billion shillings ($11 million), compared with a profit of 870.7 million shillings a year earlier. Khan and Kabui stepped down on April 6, the same day that the lender restated its results with a qualified opinion by auditors. A run on the bank by depositors forced Chase Bank’s to close on Thursday.

Ahmed said he hadn’t seen the police statement, when called for comment.

“I don’t know why they have decided to go that route,” he said by phone from Nairobi.

Cooperating Banks

Kisire wasn’t available when Bloomberg called National Bank’s offices and Bloomberg wasn’t immediately able to find an alternative contact number for him. Calls to Chase Bank weren’t answered when Bloomberg sought to obtain comment from Khan and Kabui.

National Bank "will cooperate with authorities and regulators in the case, if they are called upon in any capacity," Patrick Kinyua, a spokesman, said by phone.

Boinnet said the police had also arrested one person to face charges related to the misuse of social media to “disseminate falsehoods about the banking sector.” Njoroge said on Thursday “malicious comments” on social-media sites including Twitter and WhatsApp were part of the reason Chase Bank was placed under receivership on Thursday.

Before it's here, it's on the Bloomberg Terminal.