Parliament lists banks that moved the NYS billions

The banks that moved billions of shillings in controversial transactions involving the National Youth Service (NYS) were named Tuesday as a parliamentary probe warned the extent of the scam at the agency could be bigger than previously quoted.

Documents received by the Public Accounts Committee (PAC) indicate that the NYS dealt with more than 30 banks or more than 70 per cent of Kenya’s 41 banks.

Members of the House team said they received information from the Devolution ministry that the banks have handled the cash since 2013.

“In the period under review, the money that left NYS was more than what you have heard in this room,” PAC chairman Nicholas Gumbo said at a press conference at Parliament.

The PAC said it needs to question the companies and banks to establish if any impropriety was committed in their transactions.

The additional banks named Tuesday are: Equity, Diamond Trust Bank, Cooperative, Consolidated, First Community, Bank of Baroda, African Banking Corporation, I&M, Paramount, Chase, Bank of Africa, Transnational, Housing Finance, Giro, Gulf African, Commercial Bank of Africa, Ecobank, Fidelity and CFC Stanbic.

Banks that have already been named and submitted information to the committee are Standard Chartered, Sidian, Guaranty Trust Bank, Barclays, Kenya Commercial Bank, National Bank of Kenya, NIC, Jamii Bora, Old Mutual, Faulu, and Family Bank. 

The committee said the new revelations could lead to the discovery of an increase in the amount of money taken from the NYS fraudulently as well as the number of individuals, businesses and institutions involved.

“We received this information yesterday (Monday) and we are still collating it. All we can say for sure is that it is running into several billions and off our fingertips, it is definitely more than the figures that you’ve heard in this room,” said Mr Gumbo.

Manipulation of the government’s financial management software, outright forgery and neglect of duty enabled the theft of Sh1.6 billion between 2014 and 2015, the Auditor-General has said.

The NYS cash was illegally moved through commercial banks into individual’s pockets and ultimately used to buy personal assets, with withdrawals of Sh100 million being made per day by a single borrower.

Initially, it was reported than 18 banks had handled the NYS cash.

The Financial Reporting Centre (FRC) reckons that 15 raised 42 alerts over suspicious transactions relating to the Sh1.6 billion that was stolen through fictitious tenders. 

The Central Bank of Kenya slapped three banks with a total fine of Sh3 million for failing to report suspicious transactions relating to the NYS scandal—putting the total lenders that handled the money at 18.

READ: Three banks fined Sh3 million for NYS cash transfers

The FRC—the state agency that tracks proceeds of crime—reckons that other agencies like anti-graft body and Directorate of Criminal Investigations (DCI) were slow to act on its alerts, enabling the theft of nearly Sh2 billion.
Financial institutions are required to report all transactions above Sh1 million ($10,000) to the FRC, but most are not.
Of the 42 alerts of suspicious transactions, the FRC prepared and disseminated 19 financial intelligence reports for the Ethics and Anti-Corruption Commission (EACC) and DCI action.