A Central Bank of Kenya official and senior Imperial Bank managers altered the list of top borrowers and hid the actual list from the bank's shareholders, documents seen by the Star show.
Investigations by FTI Consulting, commissioned by the Imperial Bank shareholders immediately after the death of the late group managing director Abdulmalek Janmohamed in September, show that the bank's board received doctored reports approved by a CBK official for 13 years.
Audited accounts were perused and doctored by CBK officials on instruction from Imperial Bank managers before being submitted to the troubled bank's board.
On one occasion through an email dated Friday October 24, 2014 at 1:01 pm, the then Imperial Bank chief finance officer James Kaburu instructs CBK's banking supervision department worker Reuben Cheres, to delete specific entries in the bank's classified loans list before including them in record.
"Dear Reuben, Good afternoon. The highlighted in purple are the ones to be deleted. Classification of automotive solutions should change from doubtful to watch. Please send me the amended copy," Kaburu instructs Cheres.
The perusal of emails and internet communication of all bank employees by a firm commissioned by the IBL shareholders has revealed constant communication between CBK officials and the collapsed bank's managers aimed at concealing the massive fraud.
CBK Banking supervision officials received one statement of accounts from IBL managers who then would pass it on for altering before the same would be passed on to the bank's board and shareholders.
"The Board also received annual audited accounts authored by the managements of the bank, which accounts had been duly audited by PKF Kenya (Certified Public Accountants), the duly appointed CBK approved auditor. These accounts were also duly approved by CBK which carried out intensive annual onsite inspections to verify the contents of the said financial reports," an affidavit filled by IBL shareholders in court says.
An investigation conducted by FTI Consulting LLP of London, England at the request of the bank's shareholders shows there were significant differences on loans, overdrafts, investments and deposits from what had previously been reported to the Imperial Bank Limited Board.
The trading income was insufficient to cover what was going out and unauthorised movement of funds in a manner that circumvented the credit approval process yet all information was available to CBK supervisors.
"Investigation today has identified approximately Ksh 3bn pf movements to known accounts at third party banks at the expense of IBL and possible cash withdrawals by the GMD and others,"the FTI Consulting report says.
In one instance, a W.E Tilley account number 0102026004 had an overdraft of Ksh 446.9 million was mysteriously reduced to Ksh 25.8 million.
"In August 2015 debit entries' interest liquidation' and Debit Interest on OD total Ks 446,997,331 thus increasing the overdraft balance. On 27/08/2015 an entry with description 'New Loan' is seen for Ksh 460,345,235. This capitalisations reduces the overdraft (debit) balance from Ksh 486,244,465 to 25,899,230," the report says.
The actual list of top 50 largest borrowers from Imperial Bank Limited prior to its collapse includes Adra International Ltd who owe Sh1.8 billion, Vegpro(K) with a Sh1.4 billion loan, Italbuild Imports with Sh1.2 billion and Scarce Commodities (Sh1.1 billion).
Others are Samani Construction with Sh1 billion debt, Rods & Steel (Sh958 million), SK Amin (Sh763 million), Megha Industries (U) (Sh723million), Coolxtreme (Sh705 million), RM Patel & Partners (Sh676 million) and Central Electricals International (Sh605 million).