Tobiko wants central bank staff probed in NYS scam

Director of Public Prosecutions (DPP) Keriako Tobiko is demanding action on Central Bank of Kenya (CBK) staff who may have been complicit in the handling of Sh791 million stolen from the National Youth Service (NYS).

In a letter to Director of Criminal Investigations Ndegwa Muhoro, the DPP has asked for the investigation report on the CBK officers or the DCI commence the exercise if no inquiry has been done yet.

The investigation touches on the role the CBK officers may have had in the NYS scandal where money was transferred from the accounts of the Devolution and Planning ministry at the Central Bank to commercial banks.

“In that regard, the committee sought to know whether any investigations have been or are being undertaken by your agencies on the Central Bank of Kenya with a view to establish any culpability or complicity on the part of the CBK and/or any of its officers in aiding and abetting the scandal,” Mr Tobiko said in the letter dated November 21.

“In the event that no such investigations have been or are being undertaken, I direct that you cause such investigations to be undertaken and the resultant investigation file be forwarded to me within 21 days,” Mr Tobiko added. The DPP seeks to know if CBK officers aided or abetted the transfer of funds from the accounts held at CBK to multiple accounts in commercial banks.

More than 30 banks have been named as having been used as conduits for the dirty cash.

The Financial Reporting Centre (FRC) reckons that 15 banks raised alerts over suspicious transactions relating to the theft executed through fictitious tenders.

READ: Parliament lists banks that moved the NYS billions

Manipulation of the government’s Integrated Financial Management Information System, outright forgery and neglect of duty enabled the theft of the cash billion between 2014 and 2015, the Auditor-General has revealed.

Mr Tobiko’s letter is a follow up on the initial revelation of Sh791 million that was stolen from the NYS, but the Auditor-General has since revised the amount taxpayers lost to Sh1.6 billion.

The NYS cash was illegally moved through banks into individual’s pockets and ultimately used to buy personal assets with withdrawals of up to Sh100 million being made per day by a single borrower.

The banks named as having handled the cash are Equity, Diamond Trust Bank, Co-operative, Consolidated, First Community, Bank of Baroda, African Banking Corporation, I&M, Paramount, Chase, Bank of Africa, Transnational, Housing Finance, Giro, Gulf African, Commercial Bank of Africa, Ecobank, Fidelity, CFC Stanbic, Standard Chartered, Sidian, Guaranty Trust Bank, Barclays, KCB, National Bank of Kenya, NIC, Jamii Bora, Old Mutual, Faulu, and Family.

The FRC — the State agency that tracks proceeds of crime — reckons that other agencies like anti-graft body and Directorate of Criminal Investigations were slow to act on its alerts, enabling the theft of nearly Sh2 billion.

Financial institutions are required to report all transactions above Sh1 million ($10,000) to the FRC, but most do not.

Analysis of the 20 bank accounts of the NYS scam chief suspect Josephine Kabura indicate that she received Sh1.6 billion between October 2014 and December 2015.

This indicates the scam run for nearly 15 months and could have been detected and stopped earlier had reports of suspicious bank transactions acted upon by then state-agencies.