KACC asked to probe cash given to collapsed banks

The anti-corruption agency has been called in to investigate circumstances under which the Central Bank advanced over Sh8.3 billion to five banks under liquidation.

The figure reflects an increase of Sh78 million over the previous 2006/2007 year.

The Parliamentary Public Accounts Committee (PAC) found that recovery of the money has not been possible for many years, thereby concluding that the public may have lost billions of shillings.

The committee accuses CBK of acting in disregard of the law pertaining to securities and guarantors.

The PAC report on the government accounts for the financial year 2007/2008 was tabled in the House on Tuesday by chairman Boni Khalwale.

Members of PAC were confronted with lack of documentary evidence or analysis to support or confirm the advances.

According to the report, the collapsed Exchange Bank received the lion’s share of the advances amounting to Sh4.5 billion. Others were Trade Bank (Sh2.4 billion), Post Bank Credit Ltd (Sh1.3 billion), Euro Bank (Sh1 billion) and Continental Bank of Kenya Ltd (Sh43 million).

“The committee heard evidence by the Accounting Officer that the increment of Sh78 million related to conveyance fees incurred on the disposal of assets owned by Exchange Bank, which is under liquidation by the CBK,” reads part of the report.

While the Deposit Protection Fund had indicated that recovery of the monies was ongoing in respect of three banks, the PAC found no evidence of such recoveries having materialised.

PAC was told recovery of the debt was hampered by poor record maintenance, poor securities backing the advances and protracted legal disputes among others.

Thus, the committee wants KACC to take up the matter with a view to prosecute the officer responsible.