Bank accounts of companies and suspects stashed with money believed to have been stolen from the National Youth Service (NYS) have been frozen for six months.
A Nairobi magistrate’s court has ordered bank managers to freeze the funds as the State starts to seize assets acquired through theft of Sh8 billion from the agency.
The court issued the freezing orders following an application by Asset Recovery Agency (ARA) investigating officer Frederick Musyoki. Dozens of senior officials and business people remain in custody and face charges related to the theft of millions of shillings from the youth agency.
Mr Musyoki reckoned that the suspects and their associates were set to withdraw, transfer all the funds in the bank accounts and frustrate the ongoing investigations for recovery of public money stolen if the freeze order is not issued.
“I pray for the order to investigate the above accounts to enable me access information and documents relating to the said accounts and use for purposes of investigations,” said Musyoki in court documents.
The ARA said the suspects were paid through accounts held in nearly 10 banks for services and goods not delivered.
Banks mentioned in the ARA suit include top lenders like KCB Group #ticker:KCB, Equity Bank #ticker:EQTY, Standard Chartered Bank #ticker:SCBK, Barclays Kenya #ticker:BBK, and Co-operative Bank #ticker:COOP.
Others are Stanbic Kenya #ticker:SCBK, National Bank #ticker:NBK, Consolidated Bank, Credit Bank, NIC Bank #ticker:NIC, I&M Bank #ticker:I&M and Guaranty Bank.
Central Bank governor Patrick Njoroge said earlier an unspecified number of lenders were under investigation, with the first phase focusing on tracing the recipients of the funds from the NYS and recovering the assets.
Dr Njoroge said regulatory guidelines on handling the proceeds of corruption are clear to all financial institutions making chief executive officers of those that flouted the rules personally liable.
The law requires all financial institutions including banks, insurance companies and saccos to file with the Financial Reporting Centre (FRC) daily reports on transactions above Sh1 million and those deemed suspect.
Bank executives and persons, who are convicted for handling illicit cash face a Sh1 million fine, and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million upon conviction. Banks could also lose their licences.
Preliminary findings in the Sh9 billion fraud claims at the youth agency show that multiple payments running into tens of millions of shillings were authorised from the Integrated Financial Management Information System to the involved companies’ accounts at intervals, releasing the whole amount in less than an hour after it was asked for.
This raises the red flag on whether commercial banks involved reported any suspicious transactions to the CBK.