Up to Sh695 million of the National Youth Service (NYS) cash was channelled to individuals and companies from Guaranty Trust Bank (GT) to a number of banks, according to a paper trail the lender tabled before a parliamentary committee.
Lawmakers who sat through the Monday afternoon closed-door session of the Public Accounts Committee (PAC) indicated that part of the money was later withdrawn or wired from GT Bank to accounts at Sidian Bank and Faulu Bank.
PAC chairman Nicholas Gumbo said Sidian Bank managers had been recalled to appear before the committee Wednesday morning after the paper trail from GT Bank pointed to the direction that the cash moved.
When top managers of Sidian Bank (formerly K-Rep) appeared before PAC, they denied having received or transacted any money belonging to the NYS.
MPs on Monday grilled top managers of the GT Bank in camera in relation to the loss of Sh791 million at the youth agency.
They asked GT Bank managers to explain why the Central Bank of Kenya (CBK) slapped it with a Sh1 million fine in connection to the theft at the NYS.
Managing director Ibukunoluwa Odegbaike asked the committee to conduct the hearings in camera given that she would release the names of persons who transacted with the bank in connection to the proceeds of NYS.
Through lawyer Cecil Miller, Ms Odegbaike drew the attention of the committee that the CBK prudential guidelines prohibit banks from disclosing client information to third parties.
GT Bank was fined Sh1 million for flouting the CBK Act and the prudential guidelines following the NYS saga. Other banks penalised are Family Bank, Sidian Bank and Faulu Bank.
CBK governor Patrick Njoroge in August accused State officers of ignoring a red alert that GT Bank raised on Sh86.4 million that was wired to Out of the Box Solutions Limited, a firm that ended up receiving Sh218 million from NYS.
He said the GT Bank raised issues on the payment to the CBK which directed the same to the accountant general and the Ministry of Devolution for action.
Dr Njoroge said the CBK asked GT Bank not to pay the money pending a response, which failed to come, paving the way for the lender to process the payment.
He said regulator is seeking to amend the CBK Act to enhance the maximum penalty to be meted on banks that flout the law.
MPs are investigating payments made by the NYS after Auditor General Edward Ouko said in a special report that up to Sh1.8 billion was stolen from the NYS.