In 2018 the Central Bank of Kenya fined five top commercial banks a total of Ksh. 392.5 for failing to report suspicious transactions in connection with the theft of funds at the National Youth Service (NYS)
A case in which the Assets Recovery Agency sued a company to recover huge amounts of money obtained from the National Youth Service and where the National Bank of Kenya has led to some interesting findings. The case led to a declaration that it was a case of money laundering and interestingly, NBK, who is an interested party in the originating motion, failed to appear in the proceedings.
In a ruling by Judge E.N. Maina dated 9th March 2023, she ruled, “The upshot is that the sum of Kshs.813, 597.40 held in ACC No. 012xxxxxxxxxx00, National Bank of Kenya, is forfeited to the State. The same shall now be deposited in the applicant’s account no. 12xxxxxx39 at the Kenya Commercial Bank, KICC Branch, as prayed”.
The agency sued Mr Antony Wamiti and Arkroad Holdings Ltd but what has raised eyebrows is how bank officials failed to detect and report suspicious deposits and withdrawals from the suspect’s accounts. Investigations established that NBK received payments that were not supported by documentation either in respect of goods supplied or in respect of services rendered to the National Youth Service, which was the relevant department.
The Assets Recovery Agency had requested the court to declare the funds held in account No. 012xxxxxxxxx00 in the name of Arkroad Holdings Ltd at the National Bank of Kenya as proceeds of crime and that the funds be forfeited and deposited in account No. 12xxxxxx39 held at the Kenya Commercial Bank, KICC branch, in the name of the Assets Recovery Agency.
Investigations reveal that on April 26, 2018, the Assets Recovery Agency received information that funds had been fraudulently stolen from the National Youth Service, a department in the Ministry of Youth and Gender Affairs, through collusion between staff at the Ministry and suppliers, and that the suppliers were paid for services and goods that were never delivered through their accounts in several banks.
Investigations further revealed that Anthony Wamiti Makara, a director of Arkroad Holdings Limited received funds from the Ministry of Youth on January 12, 2017 (Ksh. 5,596,060.35), on March 21, 2017 (Ksh. 8,441,314.65), and on April 27, 2017 (Ksh. 9,543,211.20).
However, Mr Makara, in a quick rejoinder, claimed that he was involved in legitimate businesses, including the supply of cutting blades, drilling grease, and construction materials.
He claimed that the aforesaid funds were obtained from a business contract with the Nyeri County Government, which on March 8, 2018, paid him a deposit of Ksh. 2,038,487 for services rendered. Investigations further revealed that the funds in that account were received from the National Youth Service, but there is nothing to show that there was anything to support the payment; there is no documentation, such as a tender document, an award of tender, delivery notes, or acceptance notes, to show that any goods or services were supplied to the National Youth Service by Mr Makara or his company Arkroad Holdings Limited.
In 2018 the Central Bank of Kenya fined five top commercial banks a total of Ksh. 392.5 for failing to report suspicious transactions in connection with the theft of funds at the National Youth Service (NYS). This raises questions as to whether some officials at NBK were party to the money laundering scheme or if it was just a case of someone sleeping on the job. Investigations also established that Ksh. 4m was transferred from the NBK account to an account held by John Wachira Wahome, who stated that he had received the money as part-payment for a house he had sold to one Evans Kundu and his wife Millicent Matingi Kundu, Title No. LR Nakuru East Municipality/8208, at a Ksh. 25m, Mr Kundu was a procurement officer at the National Youth Service.
The judge noted that there is no doubt or dispute that Arkroad Holding’s bank account had received a total of Ksh. 23, 580,586.20 from the State Department of Youth and Gender Affairs, and by the time the Assets Recovery Agency received information and obtained warrants to investigate and thereafter an order to freeze the account, only a sum of Kshs.813, 597.40 was remaining in the account.
