Posted: Thu, Dec 09, 2010

http://www.kbc.co.ke/news.asp?nid=67947

Parliament Wednesday has cleared charterhouse bank of any wrongdoing and recommended its reopening.

The parliamentary committee on finance which investigated the controversial closure of the bank, dismissed allegations of tax evasion, money laundering, drug trafficking and siphoning of money to off shore accounts leveled at Charterhouse bank.

The committee says its probe revealed that charterhouse has never evaded tax and in fact as corroborated by the Kenya Revenue Authority its tax returns were up to date prior to its placement on statutory management.

The Chris Okemo led committee dismissing the money laundering allegations and reckoned that the proceeds of crime and anti money laundering law came into effect only in June this year, months after the bank had been placed on statutory management.

It however says there are activities at the bank that could be linked to money laundering but that could only be described as a breach of prudential guidelines which is not criminal. The report indicts the Ministry of Finance for failing to regulate the financial sector.

The ministry of finance and Central Bank is faulted for failing to provide direction on the matter of charterhouse and instead played a passive role putting the depositors funds at risk.

On allegations of drug trafficking the report says the CID department indicated in their submission that the bank has never been investigated on anything related to drugs.

It recommends that the bank be reopened acknowledging that its placement under statutory management for over four years now breaches the banking act.

The report says the banking act stipulates that statutory management is a temporary measure pending a decisive action and therefore as a move to protect depositors and creditors of the bank it is prudent to reopen the bank.

It however pegs its reopening to a clear restructure under an agreement worked with CBK which it says should support the restructuring agreement and ensure charterhouse resumes operations under a new restructured mandate.

The committee also trashed allegations by the UK and the US incriminating the bank in wrongdoing.

The chairman of the Finance Committee tabled the report whose debate will be determined by the house business committee.

The house business committee enjoys the prerogative of deciding what is listed for debate on the floor of the house.

The finance committee undertook to probe the bank following a petition filed by depositors at the charterhouse bank seeking parliament's independent inquiry into allegations leveled at the bank.