The Capital Markets Authority (CMA) wants the court to deny Munir Sheikh’s application for a stay order because the enforcement action has already been implemented and that it will not be in the public’s interest to issue such as an order.
CMA fined the former National Bank CEO Sh5 million and banned him from holding a board position for any publicly listed company or working for licensed person for three years over misrepresentation of financial statements and improper management of the bank.
The regulator fined Munir and other senior managers for overstating profits in the second and third quarters of 2015 and for embezzling Sh1 billion from the bank.
“The misrepresentation of financial statements was occasioned by premature recognition of sale of assets amounting to Sh800 million and under provisioning of loan amounts and wrongful recognition of interest income, leading to the overstatement of profit in the respective periods,” CMA said adding that Munir’s role as the chief executive and executive director should have ensured that the management team consolidated and “provided relevant, timely, and accurate information to the board of directors to discharge their regulatory responsibilities.”
Order of Stay
Munir’s application for an order of stay could see all legal proceedings regarding the case halted if the court grants him his request. According to CMA’s replying affidavit to this application, the order of stay is premature and inappropriate.
“In filing the present case and abandoning the appeal that the applicant had filed in the Capital Markets Tribunal, [Munir] has violated the provisions of section 9 of the Fair Administrations Act which required [him] to pursue the alternative remedy of the Tribunal provided for in the Act,” states CMA.
CMA through its head of investigations and enforcement Abubakar Hassan says: The current case is sub judice and the reasons given by [Munir] for filing this case in lieu of the hearing and determination of the appeal that he filed in the Tribunal is a smoke screen for the applicant’s panicky forum shopping.”
Munir has said CMA’s enforcement action was in excess of his jurisdiction and in violation of his constitutional rights to which the regulator has defended itself saying the enforcement action was “within the law and proportionate to the seriousness of the regulatory breach.”
