KPA unable to access Sh3bn deposited in Chase Bank

The Kenya Ports Authority (KPA) cannot access Sh3 billion from Chase Bank after the lender was placed under receivership in April, the authority has disclosed.

It has emerged that the KPA flouted a Treasury circular instructing all State corporations to invest surplus funds in Treasury bills and bonds.

Ms Catherine Mturi-Wairi, the KPA managing director, told the Public Investment Committee (PIC) that KPA had a total of Sh2,956,547,000 in a fixed deposit interest-earning account at the time Chase Bank collapsed.

She said KPA has been earning zero interest for the billions which have been tied up in the lender’s accounts despite the bank having reopened its doors.

The Central Bank of Kenya (CBK) placed Chase Bank under receivership on April 7, 2016 after it experienced liquidity difficulties following inaccurate social media reports and the stepping aside of two directors.

The bank has since been reopened under the management of the Kenya Commercial Bank and depositors allowed to access up to Sh1 million.

This means that KPA has access to up to Sh1 million. The KPA management told PIC, chaired by Eldas MP Adan Keynan, that failure to access the money had impacted negatively on its programmes.

“We have been unable to access the money. As at July 31, 2016 I can confirm that the money in Chase Bank accounts was not earning interest,” Patrick Nyoike, the KPA Finance Manager told the committee at its meeting held in Mombasa on Friday. Mr Nyoike said the surplus money, meant for “operations and various programmes” was banked in December 2015, four months to the collapse of the bank.

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He said the Sh1 billion that the KPA placed into its Chase Bank account on December 22, 2015 earned the authority interest of Sh42 million up to the date of receivership.

KPA managers disclosed that the authority had Sh13.2 billion of fixed deposits in 13 commercial banks. Out of the amount, Sh5.7 billion is held in Treasury bills and Sh702 million in mortgages.

The committee took the KPA bosses to task to explain how it identified and opened 10 deposit accounts at various banks in contravention of the Treasury circular No 10 of July 1992 and No 2 of February 1998.

Mr Keynan said the circulars instructed chief executive of State corporations to get an approval from the board and the Treasury before investing any surplus funds.

Mr  Keynan said the circulars also directed State corporations to invest surplus funds in Treasury bills and bonds and ordered corporations to close deposit accounts held in banks on maturity and transfer the money to the Treasury.

“The circulars are very clear. In addition the Treasury warned you to conduct due diligence on banks even as it granted you approval to open 10 accounts in commercial banks.

‘‘Nowhere did the Treasury approve that you deposit money in those banks,” he said. Mr Kimani Ichung’wa, the PIC vice chairman, wondered why KPA failed to realise that Chase Bank was facing challenges.

The KPA finance officer irked MPs when he said the KPA relied on the Treasury approval to open bank accounts as an authority to deposit the billions.

“We relied on analysis of CBK approved disclosures and publicised information, with the objective of ensuring that the financial institutions in which the authority places deposits are stable and security of deposits are guaranteed,” Mr Nyoike said.

He said the KPA board approved the panel of banks before the Treasury approvals.

Mr Keynan gave Ms Wairi seven days to provide the Treasury approvals to deposit money in commercial banks.