Equity’s Uganda executive charged with Sh274m theft
Equity Bank launched operations in Uganda in July 2008 and had grown the subsidiary to more than 31 branches by the end of last year. PHOTO | FILE
What you need to know:
David Serwamba Musoke was on Tuesday charged with stealing $1.4 million (Sh137 million) through money laundering, according to the charge sheet in a Kampala court.
He is facing two other charges of embezzlement, in which he is accused of stealing $700,000 and $750,000 (or a total of Sh142.1 million) which prosecutors say went into his possession by virtue of his employment.
An Equity Bank Uganda executive has allegedly swindled the lender of $2.8 million (Sh274 million), adding the Kenyan firm to the growing list of companies that have been hit by internal theft.
David Serwamba Musoke, the operations manager at Equity Bank’s Oasis Mall Garden branch, was on Tuesday charged with stealing $1.4 million (Sh137 million) through money laundering, according to the charge sheet in a Kampala court.
He is alleged to have committed the offence with eight co-conspirators who were not before court.
Mr Musoke is separately facing two other charges of embezzlement, in which he is accused of stealing $700,000 and $750,000 (or a total of Sh142.1 million) which prosecutors say went into his possession by virtue of his employment.
The manager faces a fourth charge of causing Equity Bank financial loss of $1.4 million (Sh137.2 million) by authorising payment of the money to false owners without proper verification and due diligence.
Six businessmen and a driver are listed as co-conspirators in the crime. They are Abubakar Kalungi, Shafik Mubarak, Mathew Keeya, Isaac Serwamba, Joseph Mugisha, Kenneth Matovu and Bernard Lubega.
They are said to have helped Mr Musoke to “convert, conceal and transport” funds on the first charge of money laundering, but have not been cited for the other crimes.
The Anti-Corruption Court in Kampala on Wednesday denied the eight suspects, who have been in police custody for over a month, bail after the presiding judge ruled that they were a flight risk.
“Basing on the fact that the sureties the suspects have presented have not convinced court on their exact places of residence, there is a high likelihood of them (suspects) absconding from court,” said Justice Paul Mugamba.
“The court further remands them to Luzira prison until July 3 for mention as inquiries into their case continue.”
The accused first appeared in court on June 17th and were then sent to Luzira prison after the presiding magistrate read their charges, without allowing them to plead.
Mr Musoke is accused of committing the offence between March 28 and 29th at Oasis Mall Garden, a swanky establishment located in Kampala.
Equity Bank launched operations in Uganda in July 2008 and had grown the subsidiary to more than 31 branches by the end of last year.
The Uganda subsidiary has more than a half a million customers, according to the lender’s latest annual report. Besides Kenya and Uganda, Equity also has operations in Rwanda, Tanzania and South Sudan.
In the full year to December 31, 2014, Equity’s Uganda subsidiary returned a Sh109 million pre-tax profit, a 98 per cent increase from the previous year’s Sh55 million profit.
The subsidiary’s loans and advances stood at Sh6.4 billion at the close with customer deposits of Sh9.7 billion, a position the bank describes as promising.
“The (Uganda) subsidiary plays a pivotal role in facilitating trade and providing a gateway from Kenya to the quickly growing economies of Rwanda, Burundi, Democratic Republic of Congo and South Sudan,” Equity said in the 2014 annual report.
Fraud has been on the rise in Kenya’s banking sector but remains underreported because many lenders keep such information under wraps to curb reputational risk.
Three months ago, Chase Bank, another Kenyan lender, accused one of its bank managers of attempting to defraud it of Sh877,000 by using an ATM card to withdraw the money at various outlets in Nairobi.
Laboratory & Allied in December sued Chase Bank after it lost over Sh10 million in a series of 33 irregular cheque withdrawals from its account. The pharmaceutical manufacturer claimed that some of the bank’s employees were involved in the fraudulent transactions.
Kenya’s biggest bank by assets, KCB Group, last year announced that it had sacked about 90 employees over fraud and professional negligence highlighting rising cases of economic crime in corporate Kenya.
The previous year, the lender accused its bulk cashiers of defrauding it of Sh60 million and wiring the money to five different accounts from the bank’s Rongai branch.
The dismissals were listed in KCB’s annual sustainability report, which highlights the firm’s economic, environmental, social and governance performance as opposed to the annual report that is heavy on financial reporting.
Telecoms operator Safaricom also fired 56 employees in the year ended March following audit reviews even as it gave 16 employees warning letters and reported seven to law enforcement agencies.
A recent study by Deloitte, a consultancy found that the most prevalent forms of financial crime reported in Kenya are cash theft, cheque fraud, plastic money scams and electronic funds transfer fraud.
The survey called on banks and insurance firms to invest in robust technology and human resource to mitigate the impact of financial crimes and safeguard customer deposits and shareholder value.
It faulted banks’ strategies to preventing and combating fraud, as many of them have weak or inadequate internal control, allowing dishonest employees to succeed in stealing from them.
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