Ideas & Debate

Following money on the trail of public scandals

BANKS

Banks have a statutory obligation to monitor suspicious activity on customer accounts. FILE PHOTO | NMG

In a previous article I authored on a scandal that gripped the National Youth Service (NYS) in 2015, I expressed the hope that the suspects — including government officials implicated in the fraud — would be charged not only with the offence of fraud and related offences such as corruption and bribery; but that the main charge would be the more serious offence of money laundering under the Proceeds of Crime and Money Laundering Act which would have enabled the tracing and seizure of the illegally obtained proceeds of crime.

Fast forward to three years later. The prosecutions instigated in that case have all but fizzled out, with most of the top ranking suspects walking free having been cleared for lack of evidence and other technicality as the public continues to reel under the onslaught of new scandals involving the wanton plunder and theft of their hard earned tax money.

Hot on the heels of the NYS scandal in 2015 came the news of the Afya scandal, which likewise seems to have been forgotten.

Not to mention the previous financially crippling scandals spanning the administrations.

The public is once again up in arms; first over the recent maize purchase scandal by officials of the National Cereals and Produce Board(NCPB), which was hotfooted by the current NYS scam in which the scale of losses represent the budgets of several counties; having almost tripled the first NYS loss; and there is a sense of déjà vu as the same promises of dire action against the suspects fly predictably back and forth; with a number already sacked, arrested and awaiting trial.

While these efforts and the expressed commitment by the Executive and Judiciary to conclusively deal with the cases are noteworthy; they will come to naught if the cases against the suspects are not 100 per cent water tight to ensure conviction. It behoves the Director of Public Prosecutions (DPP) to ensure that the investigation process is appropriately coordinated between all agencies so that the necessary evidence is obtained in a timely manner.

However, while the timely prosecution and conviction of the suspects is important, the recovery of the proceeds of crime must take greater priority. It is not enough to simply sack the suspects or have them prosecuted and jailed; the money stolen must be traced and restituted to the rightful owner... who is the government.

In addition to criminal charges for fraud and corruption, the suspects must also be prosecuted for money laundering and immediate action taken such as the freezing their bank accounts and seizing any property suspected to have been bought with the proceeds of crime.

This will ensure that they do not have access to the proceeds of their crimes pending investigations and conclusion of the cases.

READ: Ngiritas can't afford Sh5m NYS case bond

In the current scandals, the DPP, Judiciary and other law enforcement agencies such as the Financial Crime Reporting Centre (FRC), the Directorate of Criminal Investigations and the Ethics and Anti-Corruption Commission will play a pivotal role in the investigation, prosecution and conviction of the suspects. The law gives them sweeping powers including carrying out surprise inspections and tracing, seizure, preservation and confiscation of property suspected to be proceeds of crime; through the Asset Recovery Agency.

Upon conviction, the law also provides for lengthy periods of imprisonment coupled with hefty fines.

To this end, the investigative process must interrogate every aspect of the suspects’ lives including analysis of their bank accounts and other financial information, and lifestyle audits to detect unexplained wealth and recent purchases of high value property.

In the previous NYS scandal, sanctions were levied against banks that received the funds and its officials for failure to report the transactions as suspicious activity despite clear signs that the transactions were not above board.

Banks have a statutory obligation under the law to monitor transactions on customer accounts for suspicious activity, with enhanced scrutiny required on accounts belonging to politically or publicly exposed persons such as politicians and senior civil servants.

In the current scandals, in which shocking tales abound of civil servants’ accounts being credited with millions of shillings overnight; banks involved in receiving the funds must also come under scrutiny and the funds frozen so that the suspects do not have access to them.

It is to be hoped that the current public outrage coupled with the Executive’s commitment to action will prompt a resurgence of efforts by all the concerned law enforcement agencies to ensure that the culprits are not only brought to book but are also denied any opportunity to enjoy the proceeds of their crimes. These efforts should extend to all government agencies.

It is however unfortunate that the current record for money laundering prosecutions is quite low, mainly due to lack of evidence and slow pace of investigations.

It is therefore imperative that the said agencies be granted all the necessary support they require to successfully prosecute the cases and obtain convictions.

MERCY W BUKU, lawyer and anti-money laundering consultant.

In the Headlines