The High Court has dismissed a case in which the Commission for Human Rights and Justice sued Metropol Corporation Limited, Metropol CRB and CBK over irregularities.
CHRJ wanted the court to suspend the operating license issued to Metropol Credit Reference Bureau Limited by the Central Bank of Kenya (CBK) pending the hearing and determination of the application.
In the case filed in 2024, the commission claimed that Metropol Corporation Limited (MCL) was established in Kenya in 1996 as a business Information and credit management company;
In 2006, it entered into the business space of providing credit rating services that enable corporates to raise capital and meet their financing needs.
The court heard that on or about April 2011, Metropol Corporation Limited’s subsidiary Metropol Credit Reference Bureau Limited was fronted, applied to the Central Bank of Kenya and was successfully licensed to provide Credit Reference Bureau (CRB) Services to all banks in Kenya.
“It is worth noting that as of end of the year 2022, the 2nd respondent, Metropol CRB had over Nineteen (19) Million Kenyans listed in their Credit Reference Bureau system, with approximately Six (6) Million of those blacklisted as loan defaulters; safely to conclude that majority of Kenyans are captured in their database,” the commission submitted.
It was further stated that on or about July 2022, the Bank Supervision department of the Central Bank of Kenya (CBK) carried out a targeted onsite supervision of Metropol CRB in accordance with Regulation 58 of the Credit Reference Bureau Regulations, 2020.
“As a result of the said inspection, the 2nd respondent was found to be noncompliant with several provisions of the Banking (Credit Reference Bureau) Regulations, 2020 and specifically with regard to; i) ii) iii) The Bureau’s Corporate Governance; The Bureau’s Database Access; and The Bureau’s Data Integrity,” the applicant claims.
Irregularities and measures
The court heard that one of the key lapses realized with the 1st and 2nd respondents by the onsite supervision of the 3rd respondent was in corporate governance where Metropol CRB was found to be operating with four (4) directors for the longest time, contrary to Regulation 43(1) of the Credit Reference Bureau Regulations, 2020 which provides that a Board of Directors of a bureau or an agency should consist of at least five (5) directors.
CBK allegedly made recommendations for Metropol CRB to make corrective measures in line with the findings of its Bank Supervision team with a provision that a report be transmitted back to CBK within fifteen (15) days; in essence the 2nd respondent was to convene an emergency board meeting.
CBK further, went ahead to impose penalties against Metropol Corporation for specific non-compliant provisions to the tune of two million shillings.
The applicant further submitted that It is worth noting that Metropol CRB is a subsidiary of Metropol Corporation Limited which in turn has only two shareholders; Samuel Omukoko, the interested party with majority of the shares at 36.3% and Mitun Enterprises (K) Ltd at 14.1%.
It is alleged that despite the strict timelines imposed by CBK for corrective measures to be taken, the Board of Directors of the 1st and 2nd respondents managed to hold a joint board meeting on the 31st day of December 2022, six (6) months later, to deliberate the issues raised in the said Targeted Inspection Report of July 2022.
CHRJ submitted that the first issue which had been raised by the 3rd Respondent was regards corporate governance and management of the 2nd Respondent entity which included but was not limited to the absence of the requisite quorum to run the company as expressly provided for in law, failure to hold regular board meetings being at least once within three (3) months as expressly provided for in law and the lack of institutional independence between the 1st Respondent and the 2nd Respondent vis-à-vis other regional subsidiaries to the extent that they share the same office space and directors.
Court documents indicated that CBK also realized that Omukoko, who presented himself as the Group Managing Director, has been drawing salaries as such without a formal appointment or an appointment letter, monies to the tune of Sh 29 million.
“In addition, it was unearthed that the said Interested party (Omukoko) had made further unauthorized and unexplainable drawings from the company coffers to the tune of Sh 82,800,000 in the same period he earned his salary,” the commission claimed
The court heard that such and other lapses in the governance and management system resulted to Metropol CRB financial status being in the pits such that its liabilities, as at July 2022 was at Sh 487,900,000 against its assets at Sh 31,200,000.
Unauthorized dissemination of data and agents
Another issue of concern related to the receiving, processing, storage and dissemination of data, the core business Metropol CRB was licensed to carry out.
Metropol CRB was allegedly found to have onboarded numerous unauthorized and unlicensed agents and agencies across the country who were tasked with handling volumes of confidential data which brought to question the integrity and safety of the said data.
The said agents were receiving large sums of money in return.
The court heard that Metropol Corporation and Metropol CRB never demonstrated any urgency in making corrective measures as directed by CBK and continue to put the public and all other financial institutions at risk.
“It is imperative that this Honorable Court stamps its authority and halt their operations while the parties canvass the issues raised in the instant Petition herein.”
Some Kenyans who have been blacklisted by Metropol accuse the firm of corruption after allegedly asking for bribes in order to clear them despite having repaid their loans and necessary fees.
