Four of the eight National Bank of Kenya (NBK) former directors facing sanctions for cooking books and stealing over Sh1 billion are set to appear in court soon for allegedly stealing millions of shillings in false claims.
The four, Chris Kisire (former chief finance officer), Boniface Biko (former director Corporate and Institutional Banking), Wycliffe Kivunira (former acting chief finance officer) and Solomon Alubala (former Head of Treasury) are this time round accused of colluding with directors of two companies to pocket Sh996 million in false claims.
They are likely to be charged alongside the directors of two firms that transacted business with NBK in 2014.
Sources at the Office of the Director of Public Prosecutions who sought anonymity for fear of leaking out investigations revealed that the four directors are set to face charges of stealing, conspiracy to defraud, abuse of office and breach of public trust.
“We are just waiting for an investigation file from CMA (Capital Markets Authority) before we move to court to charge these people. CMA had requested us to give them time to finalise investigations into the same matter and possibly roping in more suspects and preferring more charges. That should not take more than one week,” said our source.
In the latest case, the four former NBK directors are accused of colluding with the directors of the two firms to defraud the institution of Sh996 million through false claims on diverse dates in 2014.
In the first case, the four former directors are accused of colluding with the two directors of one of the firms to pocket Sh566 million from NBK by purporting to be commissions earned from deposits made by their clients.
The two firms had entered separate contracts with NBK to source for private depositors to boost the bank’s portfolio.
Investigations later revealed that the two firms never brought on board any private depositors and instead claimed commissions on the strength of deposits from government agencies such as the National Social Security Fund (NSSF).
In the second case, the four former directors and a director of the second firm are likely to face charges of stealing Sh430 million. They are also likely to face charges of conspiracy to defraud, abuse of office and breach of public trust.
The Sunday Nation has learnt that investigations were completed in November last year upon which the four former NBK officials and the directors of the two companies were to be charged in court but CMA intervened, pleading for more time to conduct further investigations into the matter with a view to recommending more charges and roping in more suspects.
Officers from CMA, ODPP, BFID and CBK were scheduled to meet last week to firm up the charges but the meeting did not take place.
Messrs Biko, Alubala, Kisire and Kivunira are among the eight top senior NBK managers who were recently punished by the capital markets regulator for allegedly falsifying books and stealing over Sh1 billion.
CMA has already fined the eight, including former NBK Chief Executive Officer (CEO) Munir Sheikh Ahmed millions of shillings and barred them from holding office in listed companies for up to 10 years.
CMA said its investigations had found the officials liable for misrepresenting the bank’s financial statements for the periods ended June 30, 2015 and September 30, 2015.
It said it had found that the Nairobi Securities Exchange (NSE)-listed bank’s profits were grossly overstated and Sh1 billion lost through an embezzlement scheme.
“The board of the CMA has taken administrative action against the NBK board members and former senior managers, who served at the bank as at December 31, 2015 for misrepresentation of financial statements and embezzlement of funds,” the regulator said in a statement.
The CMA said it has also recommended to DPP the prosecution of some of the senior managers and further criminal investigation of additional individuals.
Other senior managers facing sanctions include George Jaba (former chief credit officer) and Dennis Chumbe (former relationship manager business banking).
The distortion of financial statements was linked to a premature recognition of sale of assets amounting to Sh800 million, under-provisioning for loans, and wrongful recognition of interest income leading to overstatement of profit in the respective periods.
The regulator said the scheme was connected to a deposit mobilisation programme that paid commissions to private agents for funds banked by government agencies.
Up to 90 per cent of the commissions paid to the private agents may have subsequently been transferred back to NBK officials, the CMA said.
The CMA banned Mr Ahmed from holding any position in a publicly listed company and hit him with a Sh5 million fine.
Mr Alubala and Mr Kisire have also been disqualified from working for an issuer of securities or a licensed person for a period of 10 and three years respectively.
CMA’s move brought to the fore attempts by some members of the NBK board to sell the bank for a song three years ago.
In what has emerged as an anatomy of corruption, the Sunday Nation established that the plot became public after the National Treasury’s attempt to convert it’s over Sh5 billion debt owed by the bank to ordinary shares flopped after NBK insisted on paying the debt instead.
According to interviews and documents seen by Sunday Nation, the move would have given the government a bird’s eye view into NBK’s financial records and bank account details of customers, an issue that the bank rejected after Principal Secretary Kamau Thugge directed NBK to hand over details to the Privatisation Commission as part of the due diligence.
The move by the National Treasury put in motion a chain of events that reduced the bank into a gravy train.
The government lost control of the bank in 2011, after NSSF decided to go it alone in decision-making. Then chaired by Mr Adan Mohammed, NSSF flexed its muscles, replacing government appointees Jennifer Riria, Paul Ngumi and Alfred Juma with Mohammed Hassan, who was later voted as the bank’s chairman, Sylvia Kitonga and Erastus Mwongera.
The new appointees added to NSSF directors sitting on the bank’s board who included Cotu boss Francis Atwoli and then NSSF managing trustee, Alex Kazongo, giving the Fund five of the bank’s eight voting rights.
A few months later, the board retired Mr Reuben Marambii who had taken over in 1998 from Mr John Simba. The late Marambii had steered the bank to declare profit in 16 years and for the first time paid dividends to its shareholders in 2010.
In June 2012, Mr Ahmed was tapped from Standard Chartered Bank where he had worked for 16 years. It was the first time the National Treasury had no say on who was to head NBK.
Mr Ahmed’s brief was to help diversify NBK from consumer lending, which accounted for over 75 per cent of its loan book, to corporate lending, investment banking and insurance to support its growth.