A Nairobi court has declined to stop the Capital Markets Authority (CMA) from investigating consulting firm Ernst & Young (EY) over its audit role in the Kenyan Uchumi Supermarkets chain.

High Court Judge John Mativo Tuesday dismissed the case in which EY was seeking orders barring CMA from summoning it as part of its probe on accounting malpractices at Uchumi.

In his ruling, Justice Mativo said that EY moved to court “too early” acting on “apprehension” despite CMA having acted within the law in seeking the auditor’s input over the book cooking allegations that have rocked the supermarket giant.

“The CMA letter required EY to respond to several issues the former had raised within fourteen days. Instead EY chose to file a court case on the last day. I find that action was taken too early and at that point, there was nothing to show that CMA’s actions were done outside of the law,” Justice Mativo ruled.

Rival audit firm KPMG had prepared a report which implicated EY in accounting malpractices at Uchumi Supermarkets to cover up massive fraud and irregular dealings.

The CMA had, on the strength of the KPMG report, accused EY of helping Uchumi’s managers loot millions of shillings from the retailer through irregular deals.

EY then moved to court in September last year challenging the legality of CMA’s action against it. It sued CMA and the Attorney-General Githu Muigai seeking to stop the disciplinary proceedings.

In its argument, EY said the KPMG probe condemned it without a fair hearing, and can therefore not be used as a basis for disciplinary action.

“EY maintains its reservations and complaints against the KPMG report and the content therein. The extracts of the report as received by EY indicate that the same is a draft, unsigned and inconclusive. It is inconclusive and inadmissible in law and ought not to be relied on by the CMA in any of its processes or procedures,” EY chief executive Gitahi Gachahi said in court filings.

The Attorney-General had asked the High Court to strike out the suit, arguing that EY has failed to file evidence that it was not afforded a fair opportunity to be heard during the CMA probe.

“In inquiring into the affairs of EY, the CMA was acting within its legal mandate. EY was accorded an opportunity to present its case before the CMA therefore the issue of lack of a fair hearing does not arise in this matter,” Mr Muigai said in his court filing.