Eight directors of Kakuzi Plc have moved to the High Court seeking to block the Capital Markets Authority (CMA) from probing them over alleged conflict of interest and financial impropriety.
In a petition to the court, the directors said that the Capital Markets Tribunal erred when it allowed (CMA) to dig into business and financial dealings at Kakuzi Plc arguing that the process was not fair and did not meet the constitutional threshold.
“The tribunal erred in law in failing to find that the respondent (CMA) violated each of the appellant’s constitutional rights enshrined in Article 3591) (a) of the constitution and were entitled to the particulars of the complaints and information relating to conflict of interest and financial impropriety held by the respondent at the inquiry stage,” the directors said in the petition.
The CMA Tribunal rejected a bid by the Nairobi Securities Exchange-listed agricultural company and its directors to bar the capital markets regulator from investigating the alleged scam.
“In the upshot, this Tribunal finds no merit in the appeal, and the same is hereby dismissed with costs to the respondent (CMA),” according to the ruling delivered by the Tribunal on September 19, 2024.
The tribunal chaired by Paul Lilan said it was persuaded that the summons on June 14, 2021, and September 1, 2022, were issued within the statutory powers of the regulator.
The tribunal added that it saw no bias, procedural impropriety, ulterior motive, failure to take into account relevant matters, abuse of discretion, or unreasonableness as alleged by Kakuzi directors.
“At the point of lodging the appeal, the entire inquiry process was generally fair to the appellants and met the constitutional threshold,” the tribunal said adding that no basis had been established to enable it to set aside the summons.
The directors had challenged the summons as unlawful because it failed to identify the complaint, when it was received and what were the allegations made, and against who.
They also added that the summons failed to identify the record or document on the alleged conflict of interest as well as financial impropriety.
In the company’s view, the issues raised had been dealt with in the corporate governance assessment report which gave them an overall weighted score of 72 percent.
But CMA defended the summons arguing that the corporate governance self-assessment report and the inquiry that was launched into the affairs of Kakuzi are based on similar but distinct issues.
“The tribunal erred in law in holding that the appellants were not entitled to be given any reasons by the respondent (CMA) for withholding the information and particulars of the inquiry,” Kakuzi said through the law firm of Kaplan & Stratton.
The CMA said the inquiry was to be based on its findings and recommendations on the company’s governance assessment audit for the 2019 financial year.
These findings related to human rights abuse payment of Sh696 million and weak management and board governance structures at the company and the management and operational services agreements signed between Robertson Bois Dickson Anderson Ltd and Kakuzi plc on December 11, 2017, and Eastern Produce Regional Services Ltd and Kakuzi Plc in March 2024.
There are also allegations of business dealings and agreements with related companies, namely Robertson Bois Dickson Anderson Limited, Eastern Produce Regional Services Limited, EPK Empowerment Company (Kenya) Limited, Lintak Enterprises (K) Ltd, Linton Park (Kenya) Ltd, and Siret Tea Ltd.
Last year, CMA as part of investigations, dispatched show cause letters to all board members of Kakuzi before drawing formal charges against those responsible for abetting the alleged suspicious dealings at the company.
