Mathira MP Rigathi Gachagua has denied receiving Sh12.5 billion through three bank accounts that are the subject of money laundering investigations, saying the allegations are based on a misunderstanding of how transactions accounts at the bank are operated.
The first-term MP reckons in court documents that he moved Sh200 million back and forth in his three accounts at Rafiki Micro Finance Bank over a period of seven years, giving the impression that the multiple entries were new deposits.
He argues that the Assets Recovery Agency (ARA) used entries of the same amount of money to arrive at the billions of shillings linked to his bank accounts and flag them as proceeds of crime.
ARA says the lawmaker received more than Sh12.5 billion through three accounts in Rafiki Micro Finance Bank, in seven years, payments that have been labelled suspicious.
The agency told the court that it traced Sh7.3 billion withdrawals through bank statements in accounts that were left with a balance of Sh200 million.
But the agency says there are no bank statements to show how the balance of Sh5.1 billion was withdrawn from the fixed deposit account in what it has termed “a complex scheme of money laundering”.
The High Court has frozen more than Sh200 million belonging to the MP, offering a rare peek of his financial war chest and cash dealings from his three accounts in the micro lender not publicly known for mega transactions
One savings account had a balance of Sh773,228 after receiving Sh5.8 billion and a fixed deposit account was left with Sh35 million after receiving about Sh877 million.
A second fixed account received Sh5.87 billion of which Sh705.1 million had been withdrawn, but with a Sh165 million balance, leaving some unexplained Sh5.1 billion, according to the ARA’s court documents.
But Mr Gachagua has questioned the records captured by the ARA, arguing that the agency failed to appreciate how transaction accounts at Rafiki Micro Finance Bank are operated.
The MP said the Sh200 million has been the same fixed revolving fund rotating between three accounts for the last seven years.
And upon maturing – quarterly -- the principal amount plus interest earned are rolled back to the savings account, at his request.
“The way Rafiki Microfinance Bank Ltd operates is that if one intends to place funds on a fixed deposit, such funds are debited from relevant savings account or any other designated account and credited to a fixed deposit account,” he said.
“My revolving fixed fund of Sh200,000,000 has been subjected to this movement for the last seven years. Therefore, it is incorrect to purport that my accounts transacted a total of Sh12.5 billion.”
He reckons that the Sh200 million, which he failed to withdraw for personal use over the seven years, was from legitimate businesses.
The ARA says it is seeking further questions from Rafiki Micro Finance Bank having been unconvinced with the lender’s explanation that the Sh5.1 billion was used for trading transactions.
Documents filed in court by the ARA show that the money started moving into Mr Gachagua’s accounts soon after the Jubilee administration rode to power in 2013.
He received funds from the Ministry of Lands (Kenya Informal Settlements Programme), State Department for Planning, Ministry of Health, Bungoma County Government, Mathira CDF, Nyeri County Government and the National Irrigation Board.
The MP is the brother of Nderitu Gachagua, the first Nyeri county governor, who died in office on February 24, 2017.
He is also a close ally of Deputy President William Ruto.
In a court petition, the ARA is seeking to have the Sh200 million frozen forfeited to the State, saying it is proceeds of crime.
“Preliminary investigations established that the respondents were involved in suspected complex scheme of money laundering involving several companies, which initially received funds from government ministries and State agencies and later transferred the funds to companies/business entities associated with Gachagua and ultimately transferred the funds to Gachagua’s personal accounts,” the ARA says in court documents.
Court documents show that Mr Gachagua received a total of Sh347 million from several companies, including Encarta Diagnostics Sh112 million, Wamunyoro Investments Sh7.5 million, Rapid Medical Supplies Sh58 million and Specific Supplies Sh103 million.
Some of the money was later transferred to the two fixed deposit accounts while he wired Sh12.9 million to his spouse Dorcas and Sh9 million to Toyota Kenya and Taitan Motolink.
The agency investigated a total of 33 bank accounts that have dealt with the MP or companies associated with him, including Wamunyoro Investments Ltd, Crystal Kenya Ltd, Machine Centre, Technical Supplies and Services Ltd, Skytop Agencies and Specific Supplies Ltd.
The agency says Mr Gachagua and an associate identified as Anne Kimemia, who traded as Jenne Enterprises, were involved in a complex money laundering scheme in collusion with his associated companies.
The documents allege that the MP is a shareholder and director in the said companies.