A court case has revealed how a rogue Equity Bank employee siphoned Sh386.5 million in a month through unauthorised transfers of cash to eight companies.
The illegal cash transfers to Ubahashi Traders Limited, Calabash Adventures Limited, Jahnur Investment, Kariye Investment, Flowerish International, Kariye Salah Ali, Hotho Investments, and Sasa Pay Trust took place between May and June 2024 but have been disclosed for the first time.
Equity Bank said in court filings that the employee, who has since been dismissed, illegally transferred the Sh386,500,320 between May 17, 2024, and June 14, 2024.
The bank said that upon realising the fraud, it reported the matter to the Banking Fraud Investigation Unit of the Director of Criminal Investigations (DCI), and rushed to court for an order to freeze the accounts of the eight firms even as investigations got underway.
Equity, in its application, sought to freeze the accounts of Ubahashi Traders Limited subject to a maximum of Sh207,720,020, Kariye Investment Limited (Sh85,740,300), Calabash Adventures Limited (Sh32,000), Flowerish International Limited (Sh11 million), Kariye Salah Ali (Sh6 million), Hotho Investments Limited (Sh93.04 million), and Jahnur Investments Limited (Sh18.5 million). Equity added that Sasa Pay Trust had requested them to hold a lien over Sh26.5 million but the amount that was transferred to the company was Sh88 million.
The companies that had received the suit money, however, opposed the application by Equity Bank to freeze their accounts while they attempted to give their side of the story.
In affidavits sworn by Mohammed Hashi Adan, Kariye Salah Ali, Mohamud Mohamed Arab, Abdirashid Mohammed Hassan, and Mohammed Sahil, they said that their companies were mainly in the import business and that they often assisted each other in raising the required amounts in US dollars.
The companies said they were approached by a man named Geoffrey Kiragu, who identified himself as a property agent and claimed that he had a lot of money to convert into US dollars. They were to receive the funds in their accounts, remit them to Geoffrey, and then earn their commission.
In defending themselves, the companies said that they only later found out that the money was stolen from Equity Bank and that they were unaware of where the money came from. They added that they were just strangers to the case and that there was no justification to seize their accounts and hamper their business. They asked the court to note that they assisted the police in arresting Geoffrey and that they were being prosecuted innocently.
The companies also added that the money did not come to their accounts directly but passed through different entities before finding their way to their accounts.
Equity Bank urged the court to grant them the freezing orders as the companies had refused to return the Sh386,500,320 that had been transferred to their accounts. Additionally, the bank said that the companies were not licensed to transact in foreign exchange as the Central Bank of Kenya required. They argued that they risked losing their money if the orders were not granted.
High Court Judge Alfred Mabeya sided with Equity Bank, noting that the defendants had not denied receiving the funds from Geoffrey. The court was guided by the doctrine of tracing, which stated that even though the money was not transferred directly from the bank to their accounts, it passed through other entities but ultimately ended up in their possession.
“In the present case, at a prima facie level, the record demonstrates that the plaintiff’s funds were successfully traced to the defendants’ accounts. This, combined with, the defendants’ admission of receiving the money, establishes an arguable case,” the judge said.
“Regarding the risk of dissipation of funds, there is no assurance that the defendants will refrain from withdrawing or depleting the funds once the freezing orders are lifted. Money is a fluid commodity that can disappear by the stroke of a pen. The court finds that the plaintiff faces a significant risk of losing the money if the orders sought are not granted,” Justice Mabeya added.
