CMA to pay ex-Sanlam boss for silence that cost him new job

The High Court has ordered the Capital Markets Authority (CMA) to pay former Sanlam Investment Ltd (SIL) CEO Kennedy Muriithi Riungu Sh7.5 million for blocking his move to Gengis Capital and Mayfair Asset Managers Ltd.

Justice Lawrence Mugambi, in his judgment, said that the industry regulator condemned Muriithi without offering him a chance to be heard. 

According to the Judge, there was no explanation why CMA failed to answer the information being sought, either adverse or otherwise.

"The respondent violated the petitioner’s right to fair administrative action under Article 47 of the Constitution for unreasonably failing to notify and or require the petitioner to answer or respond to the adverse information against him to enable the respondent’s objective assessment prior to notifying his employer thus unfairly prejudicing the petitioner’s employment and inordinate and unexplained delay is issuing him a Notice To Show Cause (eight months later) despite receiving and informing the employer within a month of receipt of the said information,” said Justice Mugambi.

Justice Mugambi observed that eight months were too long for an answer.

He noted that this forced Muriithi to drop the job from his new employer as it was quick to indicate that he was under investigation without asking or engaging him over the same.

"Why take eight months from the date of receipt of the complaint to invite the petitioner to defend himself, yet the respondent was so quick to notify the employer about the investigations? The respondent cannot hide under the excuse that it was acting at the mercy of the sources or references of the information, since even after receiving the formal complaint complete with information, it did not see the need to seek the petitioner’s response before getting his employer into the matter,” he said.

Muriithi left Sanlam in 2017 after the investment management firm was sold off to Sanlam Investment East Africa Ltd (SIEAL).

Before the CMA case, he sued his former employer, arguing that he had been unfairly declared redundant.

Muriithi said that he had been offered a job at SIEAL, but lamented that it was two grades lower than what he had in his previous job. At the same time, he stated that he was placed in business development, a role he was not an expert.

He also said that he was not given severance pay as other employees. SIL denied the claims. It argued it ceased doing business, hence Muriithi was declared redundant.

In the end, Justice Nzioki Makau ordered the firm to pay him Sh1.39 million which was a computation of leave compensation which had not been properly calculated.  

The judge however dismissed the redundancy case.

In the case against CMA, Muriithi said that he was to begin a new role at Genghis Capital in December 2017 after leaving SIL.

He stated that he applied for a ‘fit and proper’ assessment with CMA through Genghis. Nevertheless, CMA wrote to the bank on June 16, 2029, informing the lender that it had held the application in abeyance.

Muriithi said he lost the new job.

The court heard that Muriithi applied for another clearance on March 25, 2022, this time for another job at May Fair Asset Managers Ltd. However, he said that the regulator gave his application the same cold treatment.

Muriithi asked the Judge to award him Sh45.9 million as compensation for lost income.

He stated that on July 10, 2020, CMA issued him a show cause letter emanating from Sanlam Life Insurance Ltd regarding claims made during his tenure as CEO at SIL.

He stated that he had sought relevant documents but to no avail. He sought help from the Commission of Administrative Justice (CAJ). However, he argued that the firm did not comply with the timelines set.

CMA, through its senior manager, investigations and enforcement, Lawrence Mumina stated that Sanlam Investment was undertaking fund management for Sanlam Life Insurance.

He said that when Genghis applied for Muriithi’s clearance, it started the process.

Mumina said CMA wrote to Jonathan Stitchbury, who was then Sanlam Investment CEO, as part of the exercise.

Nevertheless, he claimed that before that, it had already received insurance firm Sanlam Group Kenya Plc, regarding Muriithi’s tenure at Sanlam. He said that the mother company was still undertaking forensic investigations.

CMA said that it wrote to Sanlam Group CEO Patrick Tumbo seeking further information on October 29, 2018, but was informed that the investigations focusing on SIL operations were still on and was not able to give a response on whether he would be cleared or not.

He said that Sanlam finally complained on December 20, 2018.

CMA argued that it could not be faulted for the delay as it was not indolent in conducting reference checks, as it was relying on information from third parties.

According to the regulator, it was not to blame for Muriithi’s loss of a job. Mumina told the court that the information sought was eventually furnished on August 29, 2022.

Regarding Mayfair, he said CMA granted him the sought license on August 4, 2022, without issuing an adverse reference.