Goldenberg Commission of Inquiry Report - Mars Group Kenya

[G] EXCHANGE BANK LTD
51. Application for a licence to transact banking business has to be
made through the Central Bank to the Minister. The regulations of CBK
show that application can be made before the incorporation of the
company to be used for that purpose. All that the regulations require in
that regard is a proposed name which has been approved by CBK and a
reservation of that name from the Registrar of Companies, together with
the proposed memorandum and articles of the company to be formed.
(Regulations on Lincensing of New Institutions (Exht. 13).
52. For Exchange Bank Ltd the application was forwarded on 15 th
August, 1991 to the Treasury and this was accompanied by information
that the proposed capital of 40 million was deposited with Transnational
Bank Ltd (Exht. 14 pg. 35). The proposed shareholding of the bank of 40
million was to be owned 25% by Pattni, 25% by James Kanyotu, 25% by
Mrs Daksha Rana and 12.5% each by Bhailal Patel and Rohit Damji.
53. Mr. Mbindyo noted on the letter on 21 st August, 1991 that the
application had been approved by the Minister under the name of
Exchange Bank Ltd. (incidentally it is indicative of Pattni’s
megalomania that he first wanted the bank to be called Republic
National Bank (Kenya) Ltd (Exht 14 pg. 41).
54. On 21 st May, 1991 Mr. Mbindyo notified the promoters of the
Minister’s approval and asking for the necessary licence fee (Exht. 14 pg.
30). On 23rd August, 1991 Mr. Mwangi, Deputy Director of Banking
Supervision notified the Permanent Secretary Ministry of Finance of the
approval and payment and requested the issue of a licence. This was
forwarded on 26 th August, 1991 (Exht. 14 pg. 25) as acknowledged by
Exchange Bank on 19 th October, 1991. The licence was in fact dated 1 st
August, 1991 (Exht. 14 pg. 27) but there is no indication that it was
handed over before the approval of the Minister as set out above.