Four former Uchumi directors have gone to court to stop penalties granted to them by the Capital Markets Authority (CMA) for alleged violation and liquidity challenges at the troubled Supermarket.
In their case, Mr Chadwick Okumu, Mr James Murigi, Mr Bartholomew Ragalo and Ms Joyce Ogundo claimed that the Authority has punished them over decisions taken collectively in Uchumi Supermarket Limited’s board meetings.
Through lawyers John Khaminwa and Jotham Arwa, they sued CMA for issuing them with notices to show cause in August, a year after they had already left office.
Even though they filed separate suits on Monday, they all challenged CMA’s decision to punish them and want the court to quash penalties granted to each of them.
“With a view of implementing its alleged decision, CMA has issued an enforcement order requiring them to comply, besides incurring several other irreparable losses and damages within 15 days which expire as of today,” Mr Okumu said.
Last month, the regulator fined Mr Murigi and Mr Ragalo Sh 600,000 and 855,000 respectively.
Together with ex-chief executive Jonathan Ciano, Finance director Okumu, the retailer’s former chairman Khadija Mire and the two, were banned from holding office in any public listed company.
In addition, Dr Ciano was slapped with a Sh5 million fine and is expected to refund Sh13.5 million earnings he made from Uchumi for allegedly failing to disclose that he had a conflict of interest during his tenure on the board.
The four who have filed their suits are accused of violating certain provisions of the CMA Act, Securities and Public Offers Listing Disclosures regulation as well as guidelines on corporate governance by public listed companies.
They claimed that they were issued with Notices to Show Cause on August 31, asked to appear before the Authority and tasked with explaining why sanctions against them should not be issued since they all sat as Uchumi’s board members when the impugned decisions were made.
They argued that there was no connection drawn between the alleged violations and the liquidity challenges that Uchumi subsequently suffered.
They also argued that minutes of the meeting in which they are accused of making the impugned decision indicate that resolutions with regard to the violations were discussed.
They claimed that what CMA is referring to were indeed discussed in several other meetings that involved the board that was there before them in which the four did not participate.
They alleged that some directors who were present in the said meetings have not been subjected to the same sanctions and penalties hence CMA has acted in a discriminatory manner.
They also alleged that the Authority wants to punish them personally for wrongs allegedly committed by the board of directors on the basis of information and professional advice received from the management of the Supermarket.
They further alleged that CMA seeks to punish persons who do not fall within its regulatory ambit hence violates their right to a fair trial.
According to Mr Okumu, he has suffered damage to his reputation and his profession as a Certified Public Accountant by not being able to hold onto a job.