Gov't Slaps Ex-Chase Bank Executives With Millions in Fines

The Capital Markets Authority (CMA), has strongly enforced against the former top management of the collapsed Chase Bank Kenya Limited, both financially and disallowed them in the long term due to alleged misconduct that had contributed to the collapse of the bank.

On Wednesday, November 19, the regulator imposed the sanctions with reference to the significant violations of financial reporting, disclosure, and governance in the Medium-Term Note (MTN) programme in 2015 by the bank.

CMA claimed that the acts and omissions of the executives were also a cause of misleading financial disclosures that had been distributed to investors prior to the collapse of Chase Bank in April 2016.

The abrupt collapse of the lender, leading to panic within the banking industry, and the last move is one of the most powerful moves in handling accountability following the crisis.

The regulator in its statement clarified that the imposed enforcement actions directly refer to violations by the former chairperson of the bank, and other senior management members that are particularly related to the issuance of the Mtn and the utilisation of the funds which were raised through the bond.

According to its mandate, which is protection and oversight of investors, the Capital Markets Authority has imposed an enforcement measure on the former Chairperson and the Senior Management of Chase Bank Kenya Limited, which the authority said is as a result of a very rigorous review conducted by a Board Ad Hoc Committee.

The most severe punishment was given to the former Chairperson, Zafrullah Khan.

CMA imposed a Ksh5 million fine on him and prevented him from holding directorships or to be a key individual in any institution under the CMA in ten years.

The committee established that Khan was weak in his oversight role, which resulted in the publication of false and misleading financial statements in the Information Memorandum (IM) relied on to prepare the MTN programme.

The regulator also observed that he was not able to disclose material information on his own payment of bonuses. CMA says that Khan was on the approval panel of his bonus and was in a position to approve his bonus even without declaring the conflict of interest, although the information did not appear in the supplementary IM.

Another case being punished is that of former General Manager for Finance, Makarios Agumbi, who was the one who prepared the financial statements on behalf of the MTN. CMA imposed a fine of Ksh3.5 million on him and barred him from working in a senior position in the capital markets in five years time.

The investigators discovered that Agumbi was instrumental in the creation of false 2014 financial statements that were relied upon in the MTN documents and who had arranged the lump sum payment of Khan's bonus on an unapproved basis contrary to the allowed payment structure by the board. James Mwaura, former GM of Corporate Assets, was also charged with misrepresenting critical financial information.

He was fined Ksh2.5 million and given a two year disqualification in capital markets positions. It was found by the committee that Mwaura had aided in the classification and the cover-up of related-party loans and advances, especially Musharakah investments. The unprocedural payment of the former chair in terms of bonuses was also involved in him. In addition to the financial fines and sanctions, CMA ordered the three ex-executives Khan, Agumbi and Mwaura to complete some form of corporate governance training before they are allowed to hold any board or position of senior executive in an institution subject to the regulation of the authority.

The regulator asserts that there should be a reinforcement of the enforcement in an effort to enhance investor confidence and ensure that similar lapses with governance do not occur in future.

The enforced action follows the publication by the Kenya Deposit Insurance Corporation (KDIC) of the list of member institutions to the financial year ending June 30, 2026. KDIC, the depositor protection statutory agency in charge of the bank resolutions, states that deposits of up to Ksh500,000 per customer are insured in the event of bank failure. Insurance in the scheme is compulsory to all licensed deposit-taking institutions in Kenya such as commercial banks, mortgage finance companies, and microfinance banks.

The list has included all the key lenders, including ABSA Bank, KCB, Equity Bank, NCBA, Standard Chartered, Stanbic Bank, Co-operative Bank, DTB, Family Bank, Gulf African Bank, and others in the 2025/2026 list. Every institution deposits in the Deposit Insurance Fund annual premiums that would be used to compensate depositors in the event of insolvency or liquidation of the bank. One of the most notable bank collapses of recent financial history in Kenya is Chase Bank which failed in 2016 due to exposure of insider loans. The most recent move by CMA is another step towards washing its past and guaranteeing integrity of the market.