Uchumi ex-bosses face further action
Land was sold despite Sh613 million having been raised from another asset sale and leaseback transaction, says the CMA
Former Uchumi Supermarkets chief executive Jonathan Ciano faces further disciplinary action for professional misconduct and financial improprieties between 2012 and 2015, the regulator has said.
The Capital Markets Authority says investigations into how Sh895 million raised through a rights issue was used and sale of assets valued at Sh1.1 billion, which the board denied approving, are still ongoing. The sale of land, the CMA says in its verdict released late Friday, was done despite Sh613 million having been raised from another asset sale and leaseback transaction.
Ciano and former finance chief Chadwick Okumu were sacked in June 2015.
The inquiry established most of the cash raised from shareholders in November 2014 settled outstanding supplier debt, and was not spent to expand the supermarket as approved. It also learnt that most of the information was changed after the approval.
“The co-mingling of the rights issue proceeds with the general trading funds further made it difficult for USL board to track the actual application of the rights issue proceeds,” the CMA says. “The ultimate application of the specific RI proceeds remains the subject of further investigations.”
The regulator said the two, with former board chairperson Khadijah Mire and former director James Murigu, had been banished from holding positions in a public firm for between one and five years. Bartholomew Ragalo, a former independent director, received a regulatory caution.
All of them were, however, fined for regulatory breaches ranging from poor governance, financial misapplication and inadequate oversight.
Ciano has been banned from serving in a public firm for five years, fined Sh5 million effective November 17. He has also lost Sh13.5 million, proceeds he made as a vegetable supplier to the struggling retail chain, for failing to disclose the conflict of interest to the board. Okumu has been disqualified from being a CFO in a public firm for two years.
The CMA has also lodged a complaint with the Institute of Certified Public Accountants of Kenya to take disciplinary action against Ciano and Okumu for professional misconduct.
Mire has been slapped with a twoyear ban from listed firms and disgorged of Sh1.77 million she earned in allowances during the financial years 2014 and 2015. She is also required to undergo a corporate governance training to be eligible for appointment in future.
Murigu has been barred from listed entities for a year and disgorged Sh660,000 board allowances. Some Sh855,000 will be seized from Ragalo who is required to undergo corporate governance training. The management has been found guilty of cooking financial books for the year ended June 2014.