Jamii Bora Bank sues for being conned into buying Uchumi shares

Jamii Bora Bank has sued an audit firm after losing millions of shillings in a fraudulent Uchumi rights issue.

The bank has sued Ernst & Young, an audit firm that apparently produced a positive report on Uchumi, which Jamii Bora relied on in buying the shares.

Jamii Bora bought 46,580,524 Uchumi shares in the 2014 rights issue that saw Uchumi raise Sh.1.6 billion — more than the Sh.896 million target the retailer had targeted.

Jamii Bora says that it invested Sh. 451 million in the retail chain during the 2014 sale of shares through a rights issue only to discover later that the decision was based on false information contained in a report prepared by audit firm.

“The forensic audit by KPMG thus revealed that Ernst & Young negligently prepared the accountant’s report and as a result Ernst & Young misrepresented the financial position of Uchumi Supermarkets Limited,” Jamii Bora says.

The bank is now Uchumi’s single largest shareholder. It asserts that a forensic audit on Uchumi by KPMG has since revealed that Ernst & Young was negligent in its interrogation of the retailer’s books. However, Ernst & Young has denied the existence of a parallel audit report by KPMG.

According to Ernst & Young, the said audit from KPMG is unsigned and unreliable.