The Rise of Imperial Bank

Imperial Bank Limited began life in the early 1990s, somewhere between 1992 and 1993. It started as a modest Kenyan lender, but grew quietly and steadily into a respected mid-sized bank.

Before it became a scandal, Imperial Bank was a success. A fast-growing mid-sized lender, it was neither flashy nor loud. No. It was a solid bank, respected and trusted.

And behind that image stood one man: Abdulmalek Janmohamed, whom we’ll just call Abdul. He wasn’t just the CEO. He was the bank. A founding executive with a reputation for precision, control, and absolute authority.

Abdul had been at the helm of the bank from the very beginning — over 20 years of uninterrupted leadership. He wasn’t the face of the bank to the public. You would hardly see him in the media. But within the institution, he was the engine, the architect, the enforcer.

Staff whispered about his tight grip on decisions. Investors trusted his numbers. Regulators nodded at the clean balance sheets.

By the 2010s, Imperial Bank was reporting billions in profit. In 2014, for instance, the bank posted KSh2.6 billion pre‑tax profit. And by September 2015, its net assets rose to KSh11.2 billion.

During this time, the bank was opening new branches. It even went international, expanding its operations to Uganda. It didn’t chase headlines. It chased growth — calmly and consistently.

The expansion, coupled with the numbers, painted a picture of discipline, prudence, and confidence. Depositors trusted the brand. Investors bought the story. The man at the top had delivered — or at least everyone thought.

So how did it all fall apart?
What was wrong within?

Who allowed evils to continue for so long?
And what did it cost?

The Break Point

On October 13, 2015, less than a month after the sudden death of Abdul, the Central Bank of Kenya (CBK) made a shocking announcement: Imperial Bank would be placed under statutory receivership. The CBK cited “unsafe and unsound business conditions.”

The Kenya Deposit Insurance Corporation (KDIC) was appointed as the official receiver. Instantly, accounts were frozen, branches were shut, and depositors were left panicked.

What was initially thought to be a routine liquidity problem quickly escalated into one of the most brazen banking frauds in Kenya’s history.

The first signs of the scandal emerged when senior executives came forward and confessed to a long-running cover-up. They admitted that, for years, they had been coerced by the late CEO into approving and concealing massive fraudulent activities.

An internal audit, followed by an emergency regulatory investigation, began to peel back layers of deception that had spanned over a decade, allegedly starting as early as 2002.

At the heart of the scheme was a parallel banking system. For years, Imperial Bank had secretly practiced an off-the-books arrangement.

In the scheme, unauthorized loans and credit facilities were disbursed to a select group of insiders and clients. These loans, worth over KSh34–35 billion, were not recorded in the bank’s official systems.

Instead, they were tracked using handwritten notes, manual ledgers, and verbal instructions. These transactions were so well hidden that external auditors, the CBK, and even some board members failed to detect them for over 13 years.

It soon became clear that Abdul had not acted alone. A network of internal staff, particularly in the credit and finance departments, facilitated and covered up the scheme. A fish processing firm, W.E. Tilley (Muthaiga) Ltd, was named the largest beneficiary of the scheme.

According to investigators, Tilley had received loans worth over KSh20 billion. The money was reportedly funneled through shell companies and circular transactions.

Subsequently, investigations masked the origin and destination of the funds. Some board members claimed ignorance, and others faced scrutiny for their silence or inaction.

Following the revelations, CBK moved swiftly, launching a full forensic audit.

Also involved in the audit were financial crime investigators, including KDIC, PricewaterhouseCoopers (PwC). They confirmed that Imperial Bank had operated under a regime of institutional deception. Core banking records were falsified. Key reports were manipulated. The objective was to give an illusion of a healthy business.

In June 2016, the Central Bank of Kenya (CBK) took a critical step toward stabilizing the fallout by appointing NIC Bank (now merged into NCBA Bank) to assume control of Imperial Bank’s branch operations and select assets. This move aimed to ensure continuity for depositors and restore confidence in the banking system.

As part of the arrangement, NIC Bank absorbed Imperial Bank’s nationwide branch network and committed to servicing depositors under strict regulatory oversight.

The temporary intervention offered a lifeline to many stranded customers and marked the beginning of efforts to dismantle Imperial Bank’s troubled legacy without triggering further panic across Kenya’s financial sector.

By 2020, KDIC and CBK had initiated multiple civil suits aimed at recovering the stolen funds. Legal action targeted both insiders and external accomplices. Some settlements were reached, allowing KDIC to recover a portion of the lost money, but the full amount remained elusive.

Meanwhile, public confidence in Kenya’s banking system was badly shaken. Imperial Bank’s collapse followed hot on the heels of Dubai Bank’s failure, creating a perception of systemic weakness.

In December 2021, the CBK made it official: Imperial Bank would be liquidated. After years of audits, litigation, and payout delays, the institution that once held billions in deposits was declared beyond saving. The dreams of reviving Imperial Bank were laid to rest.

The Machinery of the Fraud

What really went wrong? The post‑mortem shows a 13‑year, highly systematized fraud machine built on five pillars:

1) The Abdul Nexus

Court records say Abdul exercised near‑total control for over 23 years of his tenure. After his death, senior staff told the board that they’d been intimidated into “creative accounting” to mask what was effectively theft. Some transactions were so crude that they were allegedly written on “chits of paper.”

2) Ghost Loans, Backdated Credits & Parallel Books

The fraud relied on unapproved loans, backdated entries, and dual accounting systems — one for the public and regulators, another for insiders. This made the bank appear profitable. However, deep inside, huge, unrecoverable exposures ballooned off the books.

3) The W.E. Tilley Connection & Other Linked Parties

Multiple reports and articles tie W.E. Tilley and related entities to the fraudulent ecosystem, with billions allegedly routed through their accounts. This link would later spill over into Kenya’s fish export industry, causing unexpected collateral damage.

4) Governance Failure at the Board Level

The board failed to detect or stop the scheme for years. In some instances, dividends were paid out on fabricated profits. This enabled Imperial to reward shareholders off the back of cooked numbers.

Only after Abdul’s death did the board begin internal investigations, appointing acting executives and alerting CBK.

5) Regulatory Blind Spots — and Alleged Collusion

There were warnings as early as 2012: an anonymous email to CBK alleged fraud inside Imperial. Years later, shareholders accused some CBK officials of excessively cozy relationships with Imperial executives, potentially compromising oversight.

Whether or not collusion occurred, regulatory action was too slow to prevent a catastrophic collapse.

I — Impacts (The Human & Systemic Damage)

When a bank fails, the damage isn’t just financial — it’s deeply personal. The collapse is usually deeply institutional, and often, devastatingly silent. Here are the real implication of Imperial Bank’s failure.

🧍‍♂️ 1. Depositors in Distress

The collapse of Imperial Bank was a personal financial catastrophe for over 50,000 depositors. Many were ordinary Kenyans: retirees, small business owners, families saving for school fees or medical care.

Overnight, they were locked out of their accounts, unable to access their money.

The psychological toll was immense — anxiety, panic, and loss of trust. For some small businesses, it meant closing shops. For many families, it meant starting over.

🛑 2. Frozen Funds and Fractured Trust

When the CBK placed Imperial Bank under receivership, all accounts were frozen. There was no clear indication of when — or if — funds would be recovered.

This created a ripple effect of panic, not just among depositors but across Kenya’s banking sector. If a “safe” bank could go down, what did that mean for the rest?

The illusion of stability cracked. Trust in Kenya’s financial system took a hit.

⚖️ 3. Justice Delayed, Justice Denied

As the dust settled, the expectation was that arrests would follow. Of course assets were frozen, names were named, and criminal charges were considered.

However, as investigations dragged on, the wheels of justice began to stall. Suspected insiders and external collaborators avoided accountability.

Court delays and legal manoeuvring compromised justice. The public grew skeptical: Was this another case where the powerful walk free while ordinary people suffer?

💸 4. KDIC’s Payout Plan: Relief in Phases

To prevent a total loss of public confidence, the KDIC stepped in with a multi-phase reimbursement strategy.

At first, only KSh100,000 per depositor was made available. While the amount was a lifeline for some, it was a drop in the ocean for others.

As investigations recovered more assets, the payout ceiling grew incrementally. By 2020, over KSh24 billion had been recovered — allowing for a larger payout to more depositors.

🤝 5. KCB’s Strategic Rescue

A turning point came in May 2020, when KCB agreed to acquire Imperial Bank’s good assets worth KSh3.2 billion — for just KSh10 (and of course in peppercorn).

In return, KCB took over matching customer liabilities. This allowed KDIC to release funds to more depositors, eventually covering 92% of all verified claims. This was not a full recovery, but a crucial confidence-restoring move.

🤝 5. Job loss

Approximately 470 staff members associated with Imperial were eventually either absorbed into NIC or affected by layoffs.

However, many other employees across departments likely lost their jobs, especially in branch closures and back-office reductions commonly associated with bank receivership and consolidation.

Across the industry, however, over 10k employees lost their jobs in the period between 2015 and 2017 with the collapse of Imperial Bank, Chase Bank, and Dubai Bank.

Lessons From Imperial Bank’s Collapse

Lessons from the collapse of Imperial Bank still echo loudly. They are not just about one institution, but about the fragility of trust in banking.

First, founder dominance can be a red flag. A charismatic or feared CEO should never replace strong internal controls, independent audits, and empowered boards. Personality is not governance.

Second, if it’s not in the core system, it’s not real. Off-ledger transactions, backdated entries, handwritten notes, and parallel records are all signs of rot. Banks must build systems—and cultures—that make such tricks impossible.

Third, regulators need teeth and distance. Whistleblowing in 2012 should have triggered decisive action. Instead, oversight faltered.

Regulators must act swiftly, remain independent, and maintain transparency—otherwise, the damage will only multiply.

Fourth, depositor protection must go beyond the bare minimum. Many Kenyans learned the hard way that insurance caps do not cover catastrophic frauds. People need to understand deposit insurance limits, bank risk, and why diversification matters.

Finally, crisis resolution must be fast and clear. The KCB “good bank” transfer of assets and liabilities worth over KSh3.2B was in progress.

But years of limbo eroded trust. Africa’s banking sectors need resolution regimes that restore confidence quickly, not slowly.

Imperial Bank’s failure story is a cautionary tale. The lessons are there. The question is whether we will listen.