A legislative committee wants Cytonn CEO Edwin Dande held accountable for the loss of Sh2 billion in the 7.8 million-unit Kiambu housing project, since investors will have to wait six months for the liquidation process to be completed before receiving compensation.
In a report tabled in parliament, the MPs also requested that the Directorate of Criminal Investigations (DCI) examine Mr Dande for the possible theft of Sh2 billion from the Ridge project.
The committee wants the DCI to start investigating Mr Dande and prefers criminal prosecution against him and anybody else found complicit in the issues mentioned in the petition given to parliament by Alego Usonga MP Samuel Atandi on behalf of three investors.
MPs have also requested that the DCI look into the interaction between Cytonn officials and the Capital Markets Authority (CMA) between 2015 and 2021, as well as commercial operations involving 49 Special Purpose Vehicles, including their assets and liabilities.
“The committee recommends that Cytonn’s CEO be personally held liable for the loss of funds.” “The committee recommends that he be thoroughly investigated and that proper charges be preferred against him in court,” according to the report.
According to the report, Cytonn High Yields Solution (CYHS) was an unregulated product with the promise of guaranteed returns, which violated the provisions of the Capital Market Securities (Public offers, listings, and disclosure) Regulations, 2022, and thus investors in the project were ineligible for the Investors Compensation Funds.
One of the three petitioners requested that, in accordance with Section 18 of the Capital Markets Act and Regulation 64 of the Capital Marketing (Licensing Requirements) General Regulations 2002, investors be compensated from the Investors Compensation Funds.
Investors in Capital Markets products or services are entitled to compensation from the fund if they suffer financial loss as a result of a licensed stockholder or dealer’s failure to uphold his contractual obligations, and paying beneficiaries from collected unclaimed dividends when they resurface, according to Section 18 of the Capital Markets Act and Regulation 64 of the Capital Marketing (Licensing Requirements) General Regulations 2002.
According to Regulation 69, investors must apply to CMA for compensation from the compensation fund in the form of cash or securities equal to the net loss following a financial loss caused by the breach of contract by a stockbroker, dealer, or investment bank engaged in stock broking business or dealing operations.
The investors in the unregulated Cytonn High Yields Solution (CHYS), which includes the Ridge project, are not liable for compensation from the fund, the committee learned.