|
|
Kenya: NSE Audit Traces Shady Deals Behind Francis Thuo Collapse
 |
|
|||||||||
|
||||||||||
Business Daily (Nairobi)
28 April 2008
Posted to the web 28 April 2008
Michael Omondi
The Nairobi Stock Exchange has set in motion plans that would lead to the prosecution and confiscation of property belonging to those behind the collapse of stockbroker Francis Thuo and partners.
This follows the detailed findings and recommendations of an audit sponsored by the NSE into circumstances that led to the collapse of Francis Thuo & Partners, a stock brokerage firm.
The report forms the first partial look at one of Kenya's most notorious financial scandal on the NSE that defrauded investors of Sh200 million by the time Francis Thuo was shut down by regulators on February 23, this year.
The Business Daily has established that the NSE board, which sat on March 20, has directed the management of NSE to hire consultancy firms PricewaterhouseCoopers and KPMG to carry out a forensic audit on the collapsed firm, which is hoped to give a complete picture of what happened.
This is the first time that some measure of accountability on the side of Nairobi Stock Exchange and the securities regulator, Capital Markets Authority is being seen investigating and attempting to take action on the pervasive and corrosive culture of impunity that has encouraged rogue stockbrokers to flourish in Kenya's capital market.
But still, as insiders point out, there is still so much dirt that both the NSE and CMA continue to ignore starting with the recent collapse of Nyaga Stockbrokers, which is estimated to have gone down with Sh800 million of investors money.
Even as white-collar crime has continued to flourish on the NSE, Attorney General Amos Wako has ignored the flagrant flouting of the country's securities law and Parliament continues to ignore fulfilling the oversight role it should be playing over Kenya's capital markets in defence of the public.
However, following NSE's initiative, PWC and KPMG would be expected to retrace the fraudulent dealings at the collapsed brokerage firm, identify individuals behind the fraud and trace the destination of the stolen funds.
Among those who are to be investigated are former employees and the Thuo family including Mr Peter Gachigi Thuo, the son of Mr Francis Mwangi Thuo, who founded the firm in 1964, and who also appears top of the pile of the forensic investigators agenda.
Both Thuos, who were directors of the firm, have been mentioned adversely in the NSE audit which says they financed a huge fraction of personal expenditure using resources from the collapsed stockbrokerage firm.
A huge chunk of the funds were said to have been used in personal share purchases, meeting personal utility bills and rent payments.
"Drawings from the directors of the company formed a significant portion of the company's expenses over the five year period," says the report.
Already the market regulator has started freezing property of the principal suspects starting with those owned by the Thuo family. Key among the assets are shares running into million of shillings that are owned by the Thuos under a nominee account dubbed Francistock Investments.
Chris Mwebesa, the chief executive of the NSE refused to comment on the proposed probe. But a board member, who sought not to be named given the sensitivity of the matter, confirmed that an in-depth investigation into the events leading to the collapse of the firm was on.
"We are going to the depth of Francis Thuo dealings and those responsible must be called to answer," said the board member.
The precedent setting probe on the collapsed broker is set to shock the persons behind the financial woes at Nyaga Stockbrokers, which was placed under statutory management in March after it failed to meet its financial obligations.
Nyaga stockbrokers had a negative net asset position of Sh225 million and total liability claims from clients could top Sh800 million.
|
The probe will also clear a blot on the credibility of two key institutions - the Capital Markets Authority (CMA) and the bourse - who have been accused of being lenient with those behind the financial woes at the two brokerage firms.
The NSE board has directed the management of NSE to hire consultancy firms PriceWaterhouseCoopers and KPMG to carry out a forensic audit on the collapsed firm.
In recent months, fears have been rife within the investor fraternity that the persons behind the financial woes that gripped the twin firms would remain untouched as the NSE and Capital Markets Authority remained mute.
|
| |||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Make allAfrica.com your home page | RSS Feed | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Top | Site Guide | Who We Are | Advertising | Search | Subscribe | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
| Questions or Comments? Contact us. Read our Privacy Statement. | |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||
