Dozens of Kenya’s top banks are in the firing line for handing stolen cash

A Nairobi magistrate’s court has ordered bank managers to freeze bank accounts of graft suspects mentioned in the National Youth Service (NYS) for six months.
KCB Group, Equity Bank, Standard Chartered Bank, Barclays Kenya and Co-operative Bank are among a dozen of other top lenders being targeted by anti-corruption police officers.
The ARA said the suspects were paid through accounts held in nearly 10 banks for services and goods not delivered.

Some of Kenya’s top banks are in the firing line for their alleged role in facilitating and aiding corruption.

KCB Group, Equity Bank, Standard Chartered Bank, Barclays Kenya , and Co-operative Bank are among a dozen of other top lenders being targeted by anti-corruption police officers as the government tries to trace corruption loot stashed away in these bank accounts.

A Nairobi magistrate’s court has ordered bank managers to freeze bank accounts of graft suspects mentioned in the National Youth Service (NYS) for six months 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.

“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.

Early this month, Central Bank governor Patrick Njoroge announced that the banking regulator and the office of the Director of Criminal Investigations (DCI) had launched a probe on the banks involved in the NYS scandal. He warned local banks of severe action including being blacklisted if they were found culpable of the graft offense.

“Banks have no excuses because they know the law," the governor said.

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.

Since their dramatic arrest close to two weeks ago, dozens of senior officials and business people remain holed in custody battling graft charges related to the theft of millions of shillings from the youth agency.

Mr Musyoki argued 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.

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 , Equity Bank , Standard Chartered Bank , Barclays Kenya , and Co-operative Bank .

Others are Stanbic Kenya, National Bank, Consolidated Bank, Credit Bank, NIC Bank, I&M Bank and Guaranty Bank.

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.

According to preliminary findings in the NYS scandal, 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.

The payments raises the red flag on whether commercial banks involved reported any suspicious transactions to the CBK.

Bank executives and persons convicted for handling illicit cash face a Sh1 million fine, and a three-year jail term, while institutions including banks, credit unions found culpable of facilitating such deals risk losing their licenses and fined up to Sh20 million.