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DCI probe recommends charges on 5 top banks, officials over Sh8bn NYS fraud

Noordin Haji
Director of Public Prosecutions (DPP) Noordin Haji. FILE PHOTO | NMG 

The Director of Public Prosecutions (DPP) Noordin Haji is reviewing files recommending charges on five banks and their officials in connection with the theft of Sh8 billion at the National Youth Service (NYS).

Mr Haji on Thursday said he had received filed investigation files from the Directorate of Criminal Investigations (DCI) recommending criminal charges -- and has formed a team to review the findings.

The DPP said the DCI investigations had determined that the banks -- Standard Chartered Bank-Kenya, KCB, Equity Bank, Diamond Trust Bank (DTB) and Co-operative Bank -- did not follow proper procedures, aiding the loss of the NYS funds.

“The Directors of Criminal Investigations (DCI) carried investigations with regards to criminal culpability and has today forwarded the investigation files relating to the said commercial banks with recommendations that the charges should be preferred against the banks, banks officials, individuals and entities for concealing and facilitating, aiding, abetting and benefiting from proceeds of crime...

"“I have constituted a team of senior prosecutors to independently review the respective files and make recommendations within 14 days. The decision will be communicated in due course," said the DPP Noordin Haji in a statement.

Mr Haji said the DCI probe determined that Standard Chartered Bank-Kenya received a total of Sh1.62 billion between January 2016 and April 2018, out of which Sh588.5 million was suspiciously transacted by bank officials and no report was made to the Financial Reporting Centre (FRC) as is mandatory.

KCB received a total of Sh800 million with Sh148.3 million being transacted illegally while Equity Bank received Sh886 million, out of which Sh264 million and $58,000 (about Sh5.8 million) was transacted suspiciously by officials of the bank, the DPP noted.

DTB received a total of Sh164 million out of which Sh27.9 million was suspiciously transacted while Co-operative Bank of Kenya received Sh250 million, with the DCI probe revealing that Sh25 million of the total amount was transacted illegally by the bank’s officials.

CBK fines

Last September, the CBK fined the five commercial banks a total of Sh392.5 million in connection with the theft of over Sh8 billion at the NYS.

The law requires all financial institutions including banks, insurance companies and Saccos to file with the Financial Reporting Centre 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.

Those penalised earlier by CBK were KCB Group (Sh149.5 million), Equity Bank (Sh89.5 million), Standard Chartered Bank-Kenya (Sh77.5 million), Diamond Trust Bank (Sh56 million) and Co-operative Bank (Sh20 million).

42 banks

Kenya has 42 banks including those under liquidation and receivership.

President Uhuru Kenyatta had earlier ordered unprecedented tough new sanctions against individuals and institutions who flout anti-money laundering laws.

The penalties included loss of licence for banks found culpable.

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