On Monday, November 5, 2012, at around a quarter past 10 in the morning, James Kaburu, the then chief finance officer at Imperial Bank, wrote an email to Peter Gatere, a senior employee of Central Bank of Kenya seeking a favour.

In the email, Mr Kaburu was stern: “It is time to pay up and no excuse this time round. The attached is CV of a daughter of a friend of mine who works at KRA. This time you must assist. I will call you later.”

When Imperial Bank went under on October 15, 2015, Mr Gatere was appointed the first receiver manager and has been listed as a witness against Mr Kaburu and others charged with the $449 million loss of depositors’ funds. The directors are now accusing him, in filed court documents, of taking bribes from the previous management and helping them to hide vital information regarding the fraud.

In what is panning out to be the biggest scandal in the Kenyan banking industry, court documents filed by Imperial Bank directors show collusion between CBK’s supervision employees and some of Imperial Bank staff through soft loans, school fees and special loans in exchange for helping to hide unauthorised debt.

For instance, Simeon Rono of the CBK supervision department wrote an email on June 21, 2012 detailing how Mzee (in reference to the late managing director Abdulmalek Janmohammed) assured him his children will never lack school fees.

“We agreed with Mzee sometime in 2004 that my children will never lack school fees as long as his bank was in operation. We also agreed that I shall endeavour to pay my loans to the best of my ability. Each has kept his word to date...,” Mr Rono wrote to Naeem Shah, the bank’s head of credit then.

Whistleblowing attempt

On April 5, 2012, at 6.03pm, an anonymous member of staff at Imperial Bank sent an email, in a whistleblowing attempt, over the alleged fraudulent activities in the bank, claiming that the CBK inspectors had condoned these crimes, together with the senior management, as they had loan facilities.

READ: Web of fraud that took CBK more than 3 years to crack down on

Reuben Cheres and Simon Gichuki are being accused by the directors of coaching and working with Mr Kaburu on how to delete borrowers’ data on the inspection reports.

Mr Kaburu sent an email response to Mr Cheres over the whistleblower claims, noting that there are no Central Bank inspectors who had loans at the Imperial Bank.

But documents show that some CBK staff got loans from the collapsed lender in suspicious circumstances, which were only captured off book (outside of the normal banking credit systems). For instance, Ronald Geoffrey Langat of the supervision department was advanced $16,000 from the lender on top of another loan he was servicing.

“Mr Lang’at, this is in reference to your loan request in subject. We are pleased to advise that the credit committee has approved the facility. However, this is subject to you clearing your arrears that currently stand at $411,” Aliasger Esmailgee, the assistant manager in charge of credit at Imperial bank wrote to him on November 20, 2013.

Juliana Akinyi Migunde, another employee of the same department that was to provide oversight, is also captured among those who had credit facilities at the distressed lender.

In one of the email exchanges, Mr Kaburu instructs Mr Cheres to delete some information in what the investigators say could have been a case of collusion.

“Dear Mr Reuben, the highlighted in purple are the ones to be deleted. Classifications of Automotive Solutions should change from doubtful to watch. Please send me the amended copy,” Mr Kaburu wrote. On the list provided, the changes requested can be seen to have been effected.

'Cover up'

The allegations were contained in defence and counterclaim documents filed in the High Court in December 9 by Imperial Bank shareholders in response to a September 30 Central Bank lawsuit against the lender’s directors and shareholders in which the regulator is seeking to attach the directors’ properties and assets in a bid to recover the lost $449 million.

The directors in their suit allege that the cover up, done in collusion with CBK staff and Imperial Bank senior management, went on undetected as cash and other complimentary gifts changed hands.

In October last year, Kenya’s Central Bank governor Dr Patrick Njoroge admitted that his institution’s supervision needs strengthening in order to avoid a repeat of the Imperial Bank case.

“We are going to conduct investigation into how this lapse happened. It will also focus on whether there was collusion between the bank and supervisory staff,” said Dr Njoroge.

Early this month, when he appeared before the National Assembly’s Finance Committee, Dr Njoroge, while responding to a question from nominated MP Oburu Oginga on what had been done to the staff who had been implicated in the fraud claims in the collapsed banks, said he did not have any evidence to hold any of them accountable.

Imperial shareholders’ lawyer, Andrew Wandabwa, said the central bank’s supervision department colluded with the lender’s senior management “to understate the extent and true state of facilities granted to certain bank customers, with the effect that the said amounts were neither brought to the attention of the board, nor correctly captured in IBL’s books.”

But Philip Murgor, the central bank’s lawyer, said the bank would investigate any new allegations against its officials.