The Capital Markets Authority (CMA) has stepped in to address the ongoing dispute between Genghis Capital, a Kenyan investment bank, and South African businessman Auswell Mashaba over an unpaid debt that has resulted in a property auction.
The High Court recently granted Moran Auctioneers a 15-day notice, starting January 14, to sell Genghis Capital’s assets to recover $2.74 million (approximately Sh354.55 million) owed to Mashaba. The debt originates from a $2.27 million (Sh293.08 million) loan issued on January 25, 2017, at a 7.25% interest rate. Following a default by Genghis, Mashaba secured a judgment to recover $3.1 million (Sh401.13 million), including interest. The payment plan required an initial instalment of Sh129.37 million by December 30, 2021, with the remaining balance due by August 2022.
Moran Auctioneers has listed office furniture, desktops, laptops, and other equipment for sale to recover the debt. However, CMA has intervened, emphasizing its mandate to protect investors and maintain market stability.
In a statement on Wednesday, CMA said it is engaging Genghis Capital to establish a roadmap for addressing its financial obligations. The regulator assured investors that their funds remain secure despite the ongoing dispute.
“CMA would like to clarify that clients’ assets are held in segregated accounts separate from the funds of Genghis Capital Limited,” CMA stated, emphasizing that the Genghis Unit Trust Scheme operates under the Capital Markets (Collective Investment Schemes) Regulations 2023. These regulations ensure the clear separation of the roles of the fund manager, custodian, and trustee.
CMA further reassured stakeholders that assets managed under Genghis’ Money Market Fund and Mali Money Market Fund are secure. These funds are held by an authorized custodian and overseen by an independent trustee, safeguarding client investments from the firm’s financial troubles.
The dispute highlights ongoing challenges within Kenya’s financial sector, where creditor disputes can pose risks to investor confidence. CMA’s intervention aims to balance creditor recovery with the protection of investors and regulatory oversight.
The auction of Genghis Capital’s property is a critical turning point as stakeholders await a resolution to the financial stalemate. CMA’s commitment to securing client funds underscores its role in maintaining market integrity amidst corporate financial challenges.
