The Capital Markets Authority (CMA) has issued a statement after Nairobi-based investment bank Genghis Capital failed in its bid to stop an auctioneer from attaching its office for sale to recover Ksh 355 million owed to a South African businessman.
In a statement on Wednesday January 22 CMA stated that it is engaging Genghis Capital Ltd to create a roadmap on how the firm intends to address the outstanding debt owed to its stakeholder.
“CMA would like to clarify that clients’ assets are held in segregated accounts separate from the funds of Genghis Capital Limited,” read the statement in part.
“The operations of the Genghis Unit Trust Scheme are regulated under the Capital Markets (Collective Investment Schemes) Regulations 2023, which require clear separation of the roles of the fund manager from those of the custodian and trustee.”
CMA Responds After Genghis Capital Faces Auction Over Ksh 355M Debt
CMA also clarified that client assets managed under the Genghis Money Market Fund and Mali Money Market Fund are secure, as they are held by a duly authorized custodian and overseen by an independent trustee.
This comes after South African businessman Auswell Mashaba instructed Moran Auctioneers to seize and sell office items to recover his debt.
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An order from the High Court dated January 14, 2025, had instructed the auctioneer to sell the attached properties after a 15-day notice period.
The auctioneer has identified various items for sale, including desktops, laptops, office furniture, and equipment, following a court order issued by the High Court deputy registrar on January 14.
However, the brokerage firm rushed to court in a bid to halt the auction arguing that the firm stands to suffer irreparable loss unless the court intervened.
Genghis Capital said the proclamation was irregular and unlawful as it was issued in contravention of section 21 of the insolvency act, which stops a party from executing a decree where there are pending insolvency proceedings anchored on settlement on the decree.
Consequently, High Court Judge Justice Aleem Visram on Tuesday, January 21 directed the firm to serve the application on Masaba who will respond within 14 days.
He further asked the parties to appear before him on April 28, for highlighting of submissions.
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How the Debt Accumulated
The legal battle originates from a loan of $2,265,000 (Ksh 293.08 million) that South African businessman Auswell Mashaba issued to Genghis Capital on January 25, 2017, at an interest rate of 7.25 percent.
After the investment bank failed to repay, Mashaba sought a judgment amounting to $3,100,000 (Ksh 401.13 million), including accrued interest.
The loan agreement included a payment schedule, with an initial Ksh 129.37 million due by December 30, 2021, followed by subsequent instalments through August 2022. Former managing director Geoffrey Gangla admitted to defaulting on the repayment in February 2020 before leaving the company in June 2022.
Court records reveal that former Managing Director Geoffrey Gangla admitted to the default on February 18, 2020.
A subsequent agreement on October 18, 2021, required Genghis Capital to pay $2,950,000 (Ksh 381.75 million) plus interest accrued from October 15, 2020, with specific payment deadlines.
However, only $1,115,565 (Ksh 114.35 million) has been repaid, prompting the current auction proceedings.
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