CMA summons CMC directors


Capital Markets Authority (CMA) is expected to meet Cooper Motors Corporation (CMC) management on Monday to discuss the contents of a forensic audit initiated by the Regulator to determine whether there was a breach of corporate governance standards in the troubled motor company. In a press release to the media, CMA CEO, Stella Kilonzo, said they had received the investigations report that was undertaken by Messrs Webber Wentzel on behalf of the Authority. Kilonzo said the board of the Authority has invited CMC Board to a meeting at the Capital Markets Authority offices to discuss the findings of the report. “The Capital Markets Authority (CMA) has received the investigations report on CMC Holdings Limited that was undertaken by Messrs Webber Wentzel on behalf of the Authority, under Section 11(3) (m) of the Capital Markets Act Chapter 485A of the Laws of Kenya,” reads the statement in part. The Authority also received the report on investigations conducted by PricewaterhouseCoopers (PwC) from CMC. The forensic audit reveals that the motor dealer lost up to Sh1.1 billion in extra charges to Andy Forwarders Services Ltd (AFS) — a transport and logistics company linked to former chairman Peter Muthoka — which supplied logistics services exclusively to CMC. “It is our view that as a result of these dealings, CMC Group has suffered a substantial loss of around Sh1 billion, which loss would have been avoided had CMC Group used rival competitor suppliers for the same services procured through a standard tender process,” the report read in a part. The money was lost in period between May 2006 and September last year, when the contract was terminated. The trouble at CMC came into public play in mid-September, when its CEO Bill Lay made a list of of accusations in a press conference, including the allegation that Andy fowarders services had overcharged the company by Sh2 billion in the last six years. Muthoka had earlier been replaced as the Chairman by Joel Kibe, on grounds of a conflict of interest. Lay also accused two former CMC directors of holding Sh240m in an offshore account in Jersey in the UK. What followed was a bitter exchange of words between the CEO and Muthoka, fuelled by other comments by interested parties, including Martin Forster who had resigned as CEO in March. This prompted CMA to suspend the listed motor dealer from trading at the Nairobi Securities Exchange for seven days, with effect from September 16, one month after the firm had issued a profit warning In November, Muthoka —who is the largest shareholder through Andy Forwarders —called an Extra-ordinary General Meeting through a notice to shareholders in the media. The main agenda of the meeting would be the removal of Kibe as chairman, together with a section of other directors. CMA, however, managed to stop the meeting through a court order, arguing that the matter was still under investigations. The intrigues in the motor company took another twist when on December 20, when Lay’s work permit was revoked by the minister of Immigration under unclear circumstances. The permit was reinstated two days later.

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