Central Bank’s failure to do proper regulation contributed to the loss of Sh791 million in the National Youth Service scandal, a parliamentary watchdog committee has said.
The National Assembly Public Accounts Committee has blamed Central Bank governor Patrick Njoroge for failing to stop the irregular payments.
Committee chairman and Rarieda MP Nicholas Gumbo said Njoroge was not clear on whether he was “asleep on the job as he watched the public swindled in the multimillion-shilling” payments.
“The job of the governor, other than regulatory framework, is to monitor irregular transfers. The accounts were held at CBK,” Gumbo told Njoroge.
The committee said there is no way the money could have been lost without being detected by the Banking Fraud Unit, a department at CBK.
“We have the Crimes and Anti-Money Laundering Law that should monitor the activities of the financial institutions to detect instances of shady dealings. He (governor) should have asked what people are being paid for,” Gumbo said. However, Njoroge told the committee that three banks- Sidian, Family and Faulu Micro-finance Ltd have been fined a million shillings each for handling the proceeds of crime. But the members accused him of laying the blame elsewhere when he should have stopped the transactions.
The watchdog committee is scrutinising a special audit by Auditor General Edward Ouko that revealed that over Sh1.9 billion was stolen in the NYS scandal and identified businesswoman Josephine Kabura as the prime suspect.
The funds are alleged to have been stolen through three companies owned by Kabura.
In her affidavit, Kabura adversely mentions former Banking Fraud Unit chief Joseph Mugwanja , who was later transfered to head the Kenya Airports police unit under unclear circumstances, as receiving part of the millions.
During the proceedings, it was also discovered that GT bank had written to the Treasury questioning the payments coming in but there was no response.