The Capital Markets Appeals Tribunal has quashed a Sh1 million fine imposed on former National Bank (NBK) Chief Credit Officer (CCO) George Weke six years ago.
The tribunal chaired by Paul Lilan ruled the Capital Markets Authority (CMA) did not treat Mr Weke fairly by proceeding with the hearing without giving him crucial documents from the lender so that he could defend himself against the accusations.
The tribunal noted that as a former employee of NBK, who was engaged in a legal action challenging his dismissal, his predicament with the documents could not be wished away.
The CMA had cited 11 loan facilities that were identified as non-performing throughout the year, yet they were reported as performing.
“We are of the view that the Ad hoc committee should not have gone further since the appellant (Mr Weke) was substantially restrained to discuss the crux of the notice to show cause in the contents of the 11 accounts.
Otherwise, the hearing fell short of the fair hearing process in so far as the adjudication is concerned,” the tribunal said.
Other members were Godwin Wang’ong’u, Dr Constance Gikonyo, Joseph Eboko, and Paul Wanga.
The tribunal added that the capital markets regulator ought to ensure that the administrative process is handled carefully since there are punitive consequences as a result of the quasi-judicial powers.
Mr Weke was fined Sh1 million by the CMA accusing him of potential misrepresentation of financial statements concerning the irregular restructuring and rebooking of loans without board approval, as well as failing to ensure the board received necessary information.
The regulator said in his role as CCO, Mr Weke had a fiduciary duty to ensure accurate financial disclosures and manage credit risk effectively.
He was accused of misrepresentative nature of the results approved by the board and published for investor consideration, highlighting misleading profits reported to the public for the periods ended June 30, 2015, and September 30, 2015.
The CMA defended itself saying they provided all necessary documents and dismissed claims of bias against Mr Weke.
It maintained that he breached his fiduciary duty as CCO by approving irregular restructuring of loans and failing to provide accurate credit information thereby impacting the integrity of financial statements.
