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Kenya: Nyaga Stockbrokers On Spot Over Unpaid Claims
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The East African Standard (Nairobi)
7 May 2008
Posted to the web 7 May 2008
James Anyanzwa
Nairobi
The troubled Nyaga Stockbrokers could be owing investors billions of shillings in unpaid claims.
Preliminary reports put the firm's liabilities at Sh900 million.
The estimated figure is, however, bound to change upon completion of the claims verification, currently moving at a much slower pace than anticipated, said reliable sources.
"There is a big hole in this stockbroker. We are looking at a quite huge amount of money in excess of Sh900 million from the records received so far, but we can only verify that amount after receiving all the claims," a highly placed industry source who sought anonymity told The Standard on Tuesday.
But attempts to reach Mr Chris Mwebesa, the Nairobi Stock Exchange chief executive, one of the firm's joint statutory managers together with Mr Wycliffe Shamiah of the Capital Markets Authority (CMA), were unsuccessful. Mwebesa was held up in a day-long meeting.
It is, however, emerging that the most disturbing question is: where did the said amount go?
An investor of Nyaga Stockbrokers, now under statutory management. The firm's liabilities are Sh900 million. Picture: Ann Kamoni
"The forensic auditors will be able to establish all these issues," said the source, adding, "We are still receiving claims but the process is very slow."
The auditing firm PriceWaterHouse Coopers Ltd was appointed the forensic auditor for the cash strapped firm on March 5, the day the broker was placed under statutory management to allow for probe into the firm's state of financial affairs.
According to official figures obtained by The Standard, the statutory managers had attended to about 23,000 clients by April 17 of which 8,000 were investors seeking relocation of their CDS accounts while 13,000 included those lodging claims pertaining to irregular sale of their shares.
During the same period the statutory managers had received claims amounting to Sh450 million.
The claims are yet to be verified, raising the chances of a possible extension of the six- month statutory management period, which is expected to expire on September 5.
Under statutory management
Nyaga Stockbrokers, which was controlling more than 25 per cent of the estimated 800,000 total local investment accounts, was put under statutory management on March 5, over its involvement in irregular sale of clients' shares and failure to honour clients' financial obligations.
The broker commanded the widest national reach in the brokerage industry and was ranked among top stock brokers in the last three years, recording equity turnovers of Sh2.4 billion, Sh8.5 billion and Sh12.2 billion in 2005, 2006 and last year respectively.
Meanwhile, the joint statutory managers have extended the period for lodging claims, or any other requests for transfers of CDS accounts to other members of the NSE or Central Depository Agents (CDA) to June 9.
They also warned that no further extensions would be granted.
" All claims, and/or any requests for transfer must be lodged within this period since no further extension will be granted," they said in a statement on Tuesday.
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The statutory managers will also be relocating their operations from Nation Centre, Nairobi, to Kenyatta International Conference Centre Nairobi, to ensure timely completion of this process and to improve services delivery, from May 12.
"The new location will also allow us to put in place additional employees to deliver faster services," they said.
Claims, and requests for transfer may be lodged from 9 a.m. to 4 p.m. every day except Sundays. The Nation Centre offices and the Thika Branch of Nyaga Stockbrokers (under statutory management) will be closed to clients.
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