Former CIC staff charged with theft of investors’ funds
Posted Sunday, July 1 2012 at 14:42
Henry Kibicho, a former employee of CIC Insurance who initiated a pyramid-like scheme through which investors lost millions of shillings last year, has been arrested and charged with fraud.
The suspect, who had been on the run for five months, was arraigned in court last week and is being held in police custody after failing to raise a Sh10 million bond, according to Mr Sammy Makove, the Commissioner of Insurance.
“Mr Kibicho has been charged with fraud and is currently in police custody,” said Mr Makove who is also the chief executive of the Insurance Regulatory Authority (IRA). Mr Makove said the former CIC clients reported losing Sh15 million to the regulator.
Investors were lured with the promise of high returns that a life insurance product known as Mavuno offered, though CIC Insurance said that it was withdrawn from the market owing to poor performance. Some victims of the fraudulent scheme, who had reported the scam to the regulator, had invested millions of shillings raised through bank loans prior to its collapse early this year.
Mr Makove said that most of the investors were earning a 10 per cent return per month (120 per cent per annum), which was much higher than the 20 per cent interest rate levied on bank loans per year.
Mr Kibicho faces up to seven years in jail if convicted. The investors were allegedly led to believe that they were putting money in legitimate insurance products offered by CIC Insurance.
The victims of the fraudulent scheme told the Business Daily earlier that deposits were made every Monday while returns were paid out on Tuesdays.
One female investor, who asked not to be named, showed the Business Daily documents indicating that she had invested Sh10 million in the scheme.
Four others held documents showing that they had put Sh5.8 million, Sh3.9 million, Sh2.2 million, and Sh1.2 million into the scheme.
The victims argued that longevity of the scheme and backing by a registered insurer had convinced them that Mavuno was a genuine investment project.
All the victims interviewed produced monthly account statements printed on CIC Insurance letterheads.
In 2007, about 90,000 investors lost over Sh2 billion in a similar scheme run by the late George Donde, under the name Development Entrepreneurship for Community Initiative (DECI).
A parliamentary committee set up to investigate pyramid schemes following the death of several victims through suicide unveiled that Kenyans had lost over Sh34 billion through such investments.
Last November, Attorney General Githu Muigai promised to set up a taskforce within his office to help victims of pyramid schemes trace their lost billions.