NBK mum on details of secret police chiefs account

The National Bank of Kenya has declined to reveal names of the security chiefs behind an account that Parliament said was used to withdraw up to Sh2.85 billion in the run-up to the last General Election.

The account, which the Public Accounts Committee (PAC) described as being “irregular,” was used to draw funds from the Central Bank of Kenya without any documentation to show intended usage for the cash in line with government accounting requirements.

The Nairobi Securities Exchange-listed lender said it could not name the signatories, citing customer confidentiality rules.

“We wish to advise that, as a financial institution regulated by the Central Bank of Kenya, we are bound to observe and comply with requisite regulations pertaining to customer confidentiality and, as such, we are not in a position to disclose to third parties (including the media) any details about any of our customer accounts or dealings thereon unless as stipulated by the law,” said NBK a response to the Business Daily queries.

In its report released two weeks ago, PAC called for the immediate closure of the account and recommended to the Ethics and Anti-Corruption Commission and the Director of Public Prosecutions to investigate the account and bring to book the accounting officers who operated it.

“The nebulous ‘P.Com’ bank account operated by the Ministry of Interior at the National Bank of Kenya must be investigated with a view of having it closed,” says the committee in its recommendations.

The House team said all the transactions at the NBK Police account were done by a single officer named Ben Kihia, a senior accountant at the Office of the President.

READ: How police chiefs used secret account to steal Sh2.8bn

The PAC says the NBK Police account was opened and run without the approval of the National Treasury and was meant to bypass the set Sh700,000 ceiling per week for cash withdrawals at the CBK where ministries operate their accounts.

The PAC report paints a picture of a well-orchestrated plunder scheme at the Office of the President presided over by top security chiefs — where cash withdrawals from the secret bank account were made up to five times a day.

Mr Francis Kimemia, the secretary to the Cabinet, and Defence PS Mutea Iringo — both previously served as PSs and chief accounting officers at the Internal Security ministry when the alleged irregular withdrawals were made.

The PAC report gives an example of a cash withdrawal of Sh130 million made on February 26, 2013 — barely five days to the General Election.
It also cites another withdrawal from the account of Sh190 million made in April last year.

Such huge cash transactions would ordinarily require authorisation from top bank executives, as a strategy to minimise risks associated with handling of cash and the need to comply with anti-money-laundering laws.

The Central Bank prudential guidelines on prevention of proceeds of crime and money laundering require banks to demand a written statement from customers who make large and frequent deposits or withdrawals detailing the need for substantial amounts of cash.

The parliamentary committee singled out 48 cash withdrawals from the account between July 2012 and March 2013 which totalled Sh1.1 billion.

The PAC report tabled in Parliament two weeks ago said the NBK account was masked as a general account and reportedly used to withdraw huge sums of money whose expenditure was not documented.

“To circumvent regulation, the ministry operates an account at National Bank of Kenya parallel to the regular account at the Central Bank of Kenya,” said the Ababu Namwamba-led committee.

“The account, through referred to as Police Account (P.Com), is reported to be a general account at Office of the President and seems customised to irregularly facilitate unlimited cash withdrawals,” reads the report.

The committee concluded that the Sh2.85 billion withdrawn from the account and spent by the Internal Security ministry “was so opaque and smacks of loss, wastage, misapplication and pilferage.”