MPs have accused banks of complicity in the scandals that have rocked the country saying they could be playing a part in money laundering.
The legislators argued the billions paid out in the National Youth Service, National Cereals and Produce Board, Kenya Pipeline and the Ruaraka land purchase scandals indicate
insiders in some banks could be playing ball with corruption cartels.
Yesterday, one senator and eight MPs said banks are allowing cartels to conduct multi-million-shilling cash transactions without raising an eyebrow.
The politicians are Nakuru Senator
Susan Kihika, MPs Kimani Ichung’wa (Kikuyu), David Gikaria (Nakuru Town East), Kimani Ngunjiri (Bahati), Daniel Tuitoek (Mogotio), Charity Kathambi Chepkwony (Njoro), Lemanken Aramat (Narok East), Samuel Arama (Nakuru Town West) and Liza Chelule
(Nakuru Woman Rep).
Speaking in Nakuru in the presence of Deputy President William Ruto, the legislators shifted focus to banks which till now have escaped blame.
Their accusations come as various parliamentary and statutory investigative agencies dig into the scandals.
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National Assembly Public Accounts Committee chaired by Ugunja MP Opiyo Wandayi is today expected to receive a list of suppliers who made millions from
supplying milk powder, fuel and uniforms to NYS.
Suspended Public Service and Youth PS Lillian Omollo on Friday promised to table the list.
The Lands committee chaired by Kitui South MP Rachael Nyamai, on the other hand, is preparing a report on the Sh3.2 billion compulsory acquisition of prime land occupied by two public schools in Ruaraka, Nairobi. The government made a partial payment of Sh1.5 billion to two private firms.
The committee is expected to table its report when Parliament resumes on June 5.
Ruto yesterday once again urged investigators to get to the bottom of the scandals saying everyone will carry their own cross.
"The corrupt should not run to their communities or political parties for protection. We will not sacrifice the progress of Kenya to satisfy the greed of a few individuals. This time around they will not get off the hook. They will be held accountable," Ruto said.
The DP asked MPs to make necessary amendments to the law so as to "severely deal with corruption menace that has bedevilled the country".
Gikaria said commercial banks found to be aiding corruption should have their licenses cancelled.
He said: "These banks appear to be friends of corruption and tough penalties must be meted against them".
Kenya Bankers Association CEO Habil Olaka last Tuesday told the
Star
that investigative agencies must establish whether banks adhered to the regulations set by the Central Bank of Kenya.
"When investigating financial crimes, authorities must check whether banks reported such cases or not. Did financial institutions follow transaction procedures required by CBK? Did they submit annual monitoring reports to CBK and the Financial Reporting Centre
as required?" he said.
"Financial institutions must, therefore, be the first reference point by investigating agencies outside the financial sector when tracking financial crimes."
Last year, Central Bank of Kenya forced the sacking of nine top managers of Family Bank, where the bulk of the money stolen from the National Youth Service was paid to Josephine Kabura, the businesswoman at the centre of the scandal.
Four other managers at Sidian Bank (formerly K-Rep) underwent a 'fit and proper test', while Faulu Microfinance managers involved in the NYS transactions were also vetted.
The 11th Parliament summoned 22 banks adversely mentioned in the scam after key suspects, among them Kabura, admitted to having carted away in sacks millions shillings from the banks.
At least six banks used in the transaction of the estimated Sh9 billion NYS proceeds risk a Sh20 million fine by Central Bank if found guilty of flouting industry regulations.
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The regulations on more than a million withdrawal were issued in 2016 to curb money laundering.
They were issued following alleged theft of billions of shillings from NYS in the initial scam in which taxpayers lost over Sh1.6 billion.
"This new guideline aims to reduce the risk inherent with cash transactions, such as losses due to fraud and theft. We encourage you to consider use of electronic payments, which are an alternative and secure channel," CBK said in the statement dated February 16, 2016.
Under the regulations, a customer is required to fill a mandatory cash withdrawal form stating where the money is being taken and the use.
Among the questions that must be answered include: why the large cash deposit or withdrawal is necessary, why it cannot be done through electronic means, the source of the funds as well as the full identity of the intended beneficiaries.
Nakuru Town West MP Arama
called on the Judiciary to support the
Executive
and
Legislature in the fight against corruption.
"Some of these courts have become part of the corruption network in Kenya by offering bailouts and lenient penalties to corruption suspects. This must be checked," he said.
Kikuyu's Ichung'wa said there were efforts by some “cartels” and “merchants” who were hell-bent on intimidating anti-corruption MPs.
"A thief is a thief whether in government or in opposition, whether big or small. The National Assembly shall not be cowed by cartels and merchants of deceit. It will continue to hold those in power accountable. These thieves must be jailed," Ichung'wa said.
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An internal audit report from the Ministry of Agriculture showed that 18 briefcase farmers were paid Sh1.9 billion for maize they sold to NCPB while genuine farmers were locked out.
At Kenya Pipeline investigations are ongoing over an alleged irregular award of a tender for the supply of Hydrant Pit Valves. Sh600 million is said to have been lost.
PAC chairman Wandayi said last week: "We have already started with principal actors. We shall then move to beneficiaries, Treasury and those people in charge of IFIMIS (Integrated Financial Management Information System), as well as the banks that transacted proceeds."
Yesterday, the Director of Public Prosecutions Noordin Haji confirmed he had received ten files related to the NYS scandal.
Haji confirmed receiving Inquiry Files No. 51 of 2018 to 60 of 2018 through a letter from the DCI George Kinoti.
"A team of experienced prosecutors led by the DPP is currently undertaking a final review of the files. The files submitted by DCI to DPP is phase 1 of the investigations," tweets by Haji's office said.
On Friday, Haji and Kinoti met to review statements recorded by 40 individuals suspected to have been involved in the latest NYS scandal.
Omollo has since clarified that her department paid out Sh9 billion to suppliers as pending bills from her predecessors.
She told PAC that her office paid the suppliers Sh6.2 billion in the financial year 2016-17 and Sh2.8 billion in 2017-18.
"A loss of Sh9 billion would mean that NYS was technically and operationally closed for the two financial years: 2016-17 and 2017-18," she said.
"If the colossal amounts of money has been lost and was completely undetected by the Auditor General’s office, it indeed raises a lot of questions which we too are keen to understand and unravel."
Omollo and NYS boss Richard Ndubai stepped aside on May 19 for a period of three months to pave the way for investigations into the mega scam.