Reflecting on Corporate Accountability
Nine years after Chase Bank Kenya dramatically collapsed, the Capital Markets Authority (CMA) has finally drawn blood.
In a landmark ruling that has sent shockwaves through Kenya’s financial corridors, the regulator has slapped heavy fines and long disqualifications on three former top executives of Chase Bank Kenya Limited (in liquidation) for their roles in the controversial Ksh 4.8 billion medium-term note issued in June 2015 — just ten months before the bank was placed under receivership.
The message from the CMA is crystal clear: mislead investors at your own peril, even if the institution you led is already dead and buried.
The Penalties: Who Paid What
| Former Executive | Position | Fine (Ksh) | Banned from Directorships & Key Roles |
|---|---|---|---|
| Zafrullah Khan | Chairperson | 5 million | 10 years |
| Makarios Agumbi | General Manager, Finance | 3.5 million | 5 years |
| James Mwaura | General Manager, Corporate Assets | 2.5 million | 2 years |
Zafrullah Khan, the public face of Chase Bank during its final turbulent years, received the heaviest punishment — a decade-long exile from any boardroom or senior role in Kenya’s capital markets. For a man who once chaired one of the country’s fastest-growing mid-tier banks, it’s a spectacular fall from grace.
What Went Wrong?
In June 2015, Chase Bank successfully raised Ksh 4.8 billion through a listed medium-term note programme. Investors — including pension funds, saccos, and individuals — were sold a story of strength and stability.
Less than a year later, on 7 April 2016, the Central Bank of Kenya placed Chase Bank under receivership after a run on the bank exposed massive holes in its balance sheet. What followed was one of the messiest bank failures in Kenyan history, with depositors left in limbo and billions in taxpayer money eventually used to stabilise the institution under new ownership (SBM Bank Kenya).
The CMA’s investigation concluded that the 2015 bond prospectus contained material misrepresentations and omissions. In simple terms: investors were not told the true state of the bank’s health.
Why This Ruling Matters — Big Time
- Personal Liability is Real This is not a slap on the wrist of a defunct bank. These are individuals — living, breathing former executives — who now carry personal financial and professional scars.
- The Chairperson Pays the Highest Price Zafrullah Khan’s 10-year ban underscores a growing trend: regulators are holding board chairs ultimately accountable for governance failures, not just the CEOs or CFOs.
- A Warning Shot to Every Boardroom in Kenya If you sign off on a bond, rights issue, or IPO prospectus, you had better be damn sure the numbers are clean. The CMA is watching — and it has a long memory.
- Closure (of sorts) for Investors While the fines won’t bring back lost money, the ruling offers a measure of justice to bondholders who were sold a polished story while the bank was rotting from the inside.
The Final Word
The Chase Bank saga is a painful reminder that glamour and aggressive growth can sometimes mask deep rot. Today, the CMA has shown it is willing to go after the architects of that deception — years after the building collapsed.
For Kenya’s capital markets, this is a coming-of-age moment. The era of “boys’ club” accountability is slowly dying. In its place: a regulator with sharper teeth and a willingness to bite.
Zafrullah Khan, Makarios Agumbi, and James Mwaura have paid the price. The question now: who’s next?