Former Central Bank Governor Prof. Njuguna Ndungu during an interview. Ndung'u has been named in a case on fraudulent disbursement of funds from the troubled Imperial Bank. (PHOTO: FILE/ STANDARD)

A former Central Bank of Kenya governor has been named in a case on fraudulent disbursement of funds from the troubled Imperial Bank.

Eight former directors of the bank made the sensational claim in a replying affidavit by Mukesh Kumar, one of the bank's majority shareholders, in a Sh42.4 billion case facing them.

"CBK has been involved in the manipulation of the bank's schedules," claims Kumar in court documents.

The former directors claim that former Imperial Bank Group Managing Director Abdulmalek Janmohamed, who passed away on September 15, last year, maintained an "inappropriate" relationship with former CBK Governor Njuguna Ndung'u.

"Indeed, the relationship was one of collusion and corruption and there are emails confirming without doubt that the former Governor of the CBK was compromised by the former group managing director through improper gifts extended to him," says Kumar in the documents.

Imperial Bank, Kenya Deposit Insurance Corporation and Central Bank of Kenya moved to court two weeks ago seeking to recover Sh42.4 billion from the former directors.

The bank accused the directors of awarding themselves Sh2.7 billion in dividends despite knowing the bank's true financial standing.

Imperial Bank sought orders to freeze the shares that the directors own in the 42 companies linked to them.

According to the bank, forensic investigations conducted by FTI Consulting over the financial irregularities at the bank revealed multiple breaches of financial duty on the part of the directors, leading to massive losses.

However, in reply to the suit, the directors have disputed the claim, saying the bank has not produced the said report by FTI Consulting in court.

"It is irresponsible for the receiver of the bank to swear an affidavit, alleging fraud and negligence by the bank's board, in the absence of any material placed before the court in that regard, or such finding by any court of law," say the former directors.

They argue that the suit is in bad faith as there is no evidence to show that they participated or contributed in the fraud.

The former bank officials explain that following Janmohamed's death, Naeem Shah (formerly the bank's head of credit) and James Kaburu (formerly the bank's chief finance officer) were appointed on September 16, last year as acting managing director and deputy managing director of the bank respectively.

Upon their appointment, the two informed one of the former directors, Alnashir Popat, that Janmohamed had on numerous occasions initiated and authorised irregular disbursements of vast amounts of money belonging to the bank, which were hidden from the board.