Ex-Uchumi boss suffers setback in CMA lawsuit

Former Uchumi Supermarkets Chief Finance Officer Chadwick Okumu has suffered a major setback after the Court of Appeal concluded that investigations leading to his removal from office by Capital Markets Authority (CMA) over alleged scam at the retail chain was lawful.

In a judgement rendered by Appellate judges Asike Makhandia, Jamila Mohammed and Hellen Omondi reversed the decision of then High Court judge John Mativo that quashed CMA findings that it violated the principles of natural justice and was biased when it barred him from holding public office.

The judges overturned the high court ruling of May 2,2018 that had dismissed investigations instituted by the Capital Market Authority against Okumu by ruling that the probe was proper and lawful.
Justice Mativo in his decision said that the said investigations in his analysis were tainted with bias.

While setting aside the High Court’s finding, the three Judges held that Capital Market Authority investigations and the process it initiated for Okumu’s removal over allegations of gross misconduct and negligence was above board as he was accorded an opportunity to be heard vide the Notice to Show course (NTSC) dated August 31, 2016.

“We have established that the CMA, in issuing the NTSC dated August 31, 2016 to Okumu, was acting within its statutory mandate. With respect, we find that the learned trial Judge erred when he found that there existed a possibility of bias when the Authority conducted the hearing as we find that there was no basis for so finding,” The court of Appeal judges ruled.

The bench further noted that Justice Mativo erred by finding that it was wrong for CMA to act as the investigator, prosecutor, judge and executioner.

In 2016, Okumu was arrested after investigations and hearing by the regulator announced that it had found him guilty of aiding the misapplication of funds from a 2014 rights issue, failing to ensure that Uchumi’s books were accurate, misleading the retailer’s board to influence their decisions and facilitating a Sh350 million asset sale and leaseback deal with RentCo East Africa.

The CMA barred him from holding office in any public listed company for two years, prompting him to challenge the decision in court.

Faced with the nightmare of a shattered career, Okumu opted to fight the CMA’s sanctions where the Court of Appeal has held that the CMA charges against him were proper and unbiased.