Economy

Parliament summons central bank boss over Sh791m NYS theft

Central Bank of Kenya (CBK) governor Patrick Njoroge has been summoned to appear before MPs this morning over the Sh791 million theft at the National Youth Service (NYS).

Dr Njoroge will appear before the Public Accounts Committee (PAC) to shed light on the role the CBK played in detecting and deterring the multi-million shillings theft.

“We believe that such a loss could not have happened without the knowledge of the CBK. We want Governor Njoroge to tell us what the CBK did in preventing the loss of public funds that was wired from NYS to a particular bank,” Mr Nicholas Gumbo, who chairs PAC, told the Business Daily. The CBK is the banking industry regulator which monitors transactions undertaken by the various financial institutions.

PAC is probing the loss of the funds that were stolen through three companies owned by businesswoman Josephine Kabura who is at the centre of the scandal.

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Ms Kabura sensationally dragged the Banking Fraud Unit, a department at the CBK, into the case. In a sworn affidavit, Ms Kabura claimed that a former Banking Fraud Unit boss, who was transferred in the wake of the scandal, received part of the money.

Explosive special audit

Ms Kabura, who withdrew the entire Sh791 million wired into her accounts at Family Bank, alleged that the officer received Sh80 million from her after she was instructed by former Cabinet Secretary Anne Waiguru to give it to him.

PAC is piecing together a report following an explosive special audit conducted on the NYS by Auditor-General Edward Ouko. Mr Ouko found out that taxpayers lost Sh1.9 billion in the NYS scandal and identified Ms Kabura as the principal beneficiary of the theft.

Mr Ouko said Ms Kabura received a total of Sh1.3 billion on account of 11 companies that did business with the NYS and was meant to receive part of the fraudulent payment of Sh675.4 million, which flopped.

“The special audit noted fraudulent practices that led to the losses of Sh1,863,512,256 in various circumstances as is in Case 1 (Sh791,385,000), Case 2 (Sh609,252,760), Case 3 (Sh240,751,576) and Case 4 (Sh222,122,919),” the report says.

The audit, which the National Assembly ordered in the wake of the scandal, revealed that the money was fraudulently paid to Form Homes Builders, Reinforced Concrete Technologies, and Roof and All Trading.

All three companies, which belong to Ms Kabura, acted as suppliers of the agency. Out of the total, Sh218 million was irregularly paid to Form Homes Builders five months before it was even registered as a company.

The other two companies started receiving their payments two months after registration, Mr Ouko says in the report.

The audit says that Ms Kabura’s were actually shell companies that exist as mere business names at the Registrar of Companies and not as active entities in the market place.

The MPs have since grilled top managers of Family Bank who testified at a closed door session two weeks ago.

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