Money launders may have used the bank accounts of what was Kenya’s largest farmers’ union to bring in more than Sh210 billion.
Kenya Planters Cooperative Union (KPCU) accounts seen by the Nation dating as far back as 2003, a period when the country was yet to tighten surveillance on money laundering, show that a group of well-connected individuals manipulated the union’s account to clean dirty money entering the country.
For instance, an unexplained transaction on February 13, 2004, shows that the union overdrew its account by Sh210 billion ($2.53 billion) from the bank.
It was impossible for any Kenyan bank at that time to give that kind of money out to any institution, worse still on overdraft, given that no bank was in a position to raise this kind of money.
This means that unless it was a wrong entry, then this was the work of money launderers.
Illegally obtained money
Money laundering is illegally obtaining money — for instance from drugs, terrorism, corruption or other crimes — on the pretext that is from a legitimate source.
KPCU, which handles billions of shillings from the sale of coffee on behalf of its 3,000 plantation farmers and more than 700,000 small-scale farmers who are represented through more than 600 cooperative societies, could therefore provide a safe haven for launderers wishing to clean money.
The suspicious accounts are a subject of the courts and will soon be tabled in Parliament for debate as part of efforts to investigate the corruption and mismanagement that brought the union to its knees.
KPCU chairman is expected to testify in court next month.
The revelation comes at a time pressure is mounting on the government and Central Bank of Kenya to put in place stringent mechanisms to stop money laundering.
A recent report by Swiss National Bank, the Central Bank of Switzerland, shows that Kenyans have stashed away Sh72 billion (818 million Swiss francs) in Swiss banks and is among several countries in Africa with hidden wealth in the European country.
Another report by Transparency International showed that Kenyans had stashed in other foreign accounts proceeds of crime, drugs and money laundering in excess of Sh700 billion.
The money has been finding itself in the country through the property market amid fears that the banking industry may also be aiding criminals to clean the dirty money.
Most of the billions stashed away in foreign accounts by influential businessmen and powerful politicians are suspected to be proceeds of defence- and security-related contracts as well as payments of fake debts.
In what could further complicate the revival of the farmers’ union, KPCU lawyer Gichuki King’ara said he would file a case in court this week to challenge the appointment of a new board put in place to steer KPCU out of the woods.
He has accused Cooperative Development minister Joseph Nyaga of only being interested in KPCU assets.
Last week, Mr Nyaga unveiled the new team tasked to revive the union with a promise that he would pursue a bailout package from the government to pay off part of the debts to jump-start its operations.
The minister also said he would work closely with the parliamentary Committee on Agriculture to have the bailout package released in the next Supplementary Budget.
The government had set aside Sh750 million in the 2011/12 budget for KPCU revival, but the ministry declined to release the funds due to differences with the previous board officials.
A report by the parliamentary committee recommended that the government should set aside Sh1.2 billion to help revive the once vibrant farmers’ union. The report is, however, yet to be debated in Parliament.
The troubles of the firm caught the attention of President Kibaki, who in September ordered that the union be revived within six months.
But four months after the expiry of the timeline, the union is yet to get on its feet, bogged down by vicious divergent interests by the members.