Kenya’s Capital Markets Authority (CMA) has hit former Uchumi Supermarkets directors and managers including ex-chief executive Jonathan Ciano with penalties totalling Ksh21.7 million ($217,000) for their roles in conning investors through a flawed rights issue held in 2014.

Mr Ciano together with the retailer’s former chairman Khadija Mire, finance manager Chadwick Okumu, former directors James Murigu and Bartholomew Ragalo have also been banned from holding office in any publicly listed company.

The markets regulator has also barred Faida Investment Bank from carrying out any advisory services for six months for acting as lead transaction advisor and sponsoring stockbroker of the ill-fated Ksh895 million ($8.95 million) Uchumi cash call.

“On findings of conflicts of interest, the former CEO (Jonathan Ciano) was established not to have disclosed his conflict of interest involving Uchumi business partners,” CMA said in a statement.

Proceeds of crime

“The published Uchumi rights issue information memorandum was established not to have been updated with the material developments at Uchumi necessary to give investors the full picture of the impact of the funds raised through the rights issue,” the regulator said.

CMA has slapped Mr Ciano with a financial penalty of Ksh5 million ($50,000); and will also seize Ksh13.5 million ($135,000) deemed as proceeds of crime as he did not declare conflict of interest to the retailer’s board.

A forensic audit by KPMG established that Mr Ciano and his wife were among Uchumi’s largest vegetable suppliers.

Ms Mire, the former Uchumi chair, has been ordered to pay CMA all the board allowances she earned during her two-year tenure totalling Ksh1.77 million ($17,700).

Mr Murigu, currently an executive director at Metropol, was also hit with a Ksh660,000 ($6,600) fine, being the pay he received as a director at Uchumi.

The regulator has ordered Mr Ragalo to pay the Ksh855,000 ($8,550) he earned as a board member.