alexa Why top bank officials may not go to jail over Sh8bn NYS fraud - Daily Nation

Why top bank officials may not go to jail over Sh8bn NYS fraud

Sunday March 17 2019

Noordin Haji

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

BRIAN NGUGI
By BRIAN NGUGI
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The Director of Public Prosecutions (DPP) Noordin Haji says he is mulling negotiating a plea bargain with five banks and their officials in connection with the theft of Sh8 billion at the National Youth Service (NYS).

This means officials of the five banks including chief executive officers implicated in failing to follow proper procedures that resulted in aiding the loss of the funds may not go to jail, after all.

The DPP had earlier last month said the DCI investigations had determined that the lenders — Standard Chartered Bank-Kenya, KCB, Equity Bank, Diamond Trust Bank (DTB) and Co-operative Bank — suspiciously transacted the amounts and neither did they report to the Financial Reporting Centre (FRC) as is mandatory.

The DPP had constituted a team of senior prosecutors to independently review the files of the various implicated banks and make recommendations within 14 days effective February 7. This report is not yet out.

But on Wednesday, Mr Haji said he is mulling plea bargain negotiations with those implicated.

“We are looking at plea bargaining or deferred prosecution,” Mr Haji told a local television station interview.

Under the Kenyan law, plea bargain deals are strictly confidential until the testimonies are collected by prosecutors and accepted by a judge.

A plea bargain is an agreement between a defendant and a prosecutor, in which the defendant agrees to plead guilty or "no contest" (nolo contendere) in exchange for an agreement by the prosecutor to drop one or more charges, reduce a charge to a less serious offence, or recommend to the judge a specific sentence acceptable to the defence.

Deferred prosecution, on the other hand, is a type of plea bargain allowing a charge to be dropped under certain terms.

Under the justice model, an agreement is made between the judge, lawyers and defendant that may mitigate the potential consequences of a conviction, by allowing the defendant to plead guilty in exchange for a lesser sentence.

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.

“The Directors of Criminal Investigations (DCI) carried investigations with regard to criminal culpability and has today (February 7) 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 …,” Mr Haji had said on February 7.

“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 in a statement.

Mr Haji said then that 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.

Mr Haji said in the TV interview that prosecution would be conducted in line with the law.

“We are protecting the financial sector, not destroying it,” he said.

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.