The High Court has overturned a disciplinary decision by the Capital Markets Authority (CMA) against a former bank executive, ruling that the regulator violated due process by denying him access to crucial documents during its investigation.
- •The decision by Justice B.M. Musyoki, nullifies a KSh 1 million penalty imposed on Wycliffe Kivunira, a former acting Chief Finance Officer of the National Bank of Kenya, citing procedural irregularities that breached his constitutional right to a fair hearing.
- •The probe by the markets regulator was centered on allegations that Kivunira oversaw the publication of misleading financial statements and participated in embezzlement.
- •The accusations included overstating gains from asset disposals by Ksh 847.9 million and circumventing board oversight to restructure loans worth over Ksh 2.5 billion.
“The respondent’s process was tainted with unfairness, violation of the appellant’s right to fair administrative action and in breach of the rules of natural justice,” Justice Musyoki ruled.
While the CMA ultimately found no evidence linking him to the embezzlement claims, it held him responsible for violations of financial disclosure and governance standards.
The court found that Kivunira had repeatedly requested internal bank documents to prepare his defense but was denied access. Although the CMA accessed the documents, it declined to share them with Kivunira, citing confidentiality concerns raised by the bank.
Justice Musyoki criticized the CMA for failing to use its statutory powers to compel the bank to release the documents, stating that the authority acted as both investigator and judge without affording the appellant a meaningful opportunity to defend himself.
“The respondent (CMA) was carrying out a quasi-judicial function which had binding legal consequences and should have in the circumstances ensured that the appellant’s rights were respected, especially noting that it was both the investigator and the judge in the same cause,” the ruling stated.
The judgment also questioned the CMA’s expansion of its findings beyond the specific charges it had initially raised, a move the court described as a legal flaw.
“The tribunal was not trying the appellant and was not expected to issue the enforcement verdict against the appellant. Its function was to interrogate whether the respondent’s decision had been reached through a lawful and fair process,” Justice Musyoki noted.
The court declined to refer the case back to the regulator for reconsideration, citing the passage of nearly a decade since the events occurred and substantial changes at the National Bank of Kenya in the intervening period. Instead, the judge set aside both the original decision and the tribunal ruling that upheld it.
