Ecobank entangled in Sh300m fraud claim by contractor

Ecobank has been entangled in a fraud case with a construction company that claims to have lost a Sh300 million payment that was deposited in an account opened by a fraudster.

Kay Construction Company claims that fraudsters opened the account at Ecobank that was later used to receive payments that were due from the government.

The contractor is now seeking court orders to compel Ecobank to release the money, a substantial amount of which is still lying in the fraudulently opened account.

“This honourable court be pleased to issue a mandatory order directing Ecobank to release the sum total of Sh287,769,500 deposited into the  account,” said Kay Construction Company in an application filed at the commercial division of the Milimani High Court.

The contractor said in court documents that it entered into a contract with the government in 1990 for the construction of Kitui Primary Teachers Training College, but delayed completion, which prompted the government to terminate the contract.

The contractor in 2010 filed a claim in court for the work that had already been done before the contract was terminated, but later withdrew the suit after the Minister of Education promised to pay the contractual sum.

Hasmita Patel, a director of the firm, said that while compensation discussions were ongoing with the government last year, three individuals registered a company in their name and began having parallel negotiations with government over the payment.

The building firm claims that James Kigoi Kariuki, David Ndung’u Ng’anga’ and Susan Macharia went ahead to open an account with Ecobank’s Valley Arcade branch under the company name in which the government deposited the payment.

“Information obtained from the companies registry show that the three falsified the records of the applicant and have purported themselves to be directors and secretary of the applicant. They fraudulently procured and falsified records of the applicant such as certificate of incorporation, tax registration PIN and the VAT number of the applicant,” he said.

Kay Construction Company was incorporated in 1984, while the alleged fake firm was formed in June 2014. Mr Patel said the three under the forged company name Kay Construction Co. Ltd approached the Kenya Rural Roads Authority (KeRRA), which deposited Sh287.8 million in the fake account.

Justice Francis Gikonyo had earlier ordered Ecobank to freeze the account until the matter was heard and determined.

He has now allowed KeRRA to file an application seeking to compel the lender to reverse the amount paid to the bank in order to have it paid to the rightful beneficiary.

The matter will be heard on March 10.