- Moturi had been convicted for the offence of defrauding NSSF Sh1.2 billion through a collapsed stockbroker in 2008.
- The pensioners fund is said to have lost an estimated Sh5.5 billion as a result of the fraudulent acts.
Image: FILE
A former investment manager with the National Social Security Fund, Francis Moturi, has been found guilty of fraud and slapped with Sh2.6 billion fine or 14 years in prison.
Moturi had been convicted for defrauding NSSF Sh1.2 billion through a collapsed stockbroker in 2008.
The pensioners fund is said to have lost an estimated Sh5.5 billion as a result of the fraudulent acts.
While sentencing Moturi, anti-corruption court magistrate Lawrence Mugambi said NSSF lost Sh1.2 billion and Moturi is liable to pay fine for it.
“Although it is not evident or not demonstrated that Motrui received a quantifiable benefit, it was crystal clear that through his actions, NSSF lost Sh1.2 billion. In this case therefore Moturi is liable to a fine of Sh2.6 billion in default 9 years (for one charge) as spelt out under section 48 of ACECA,” Mugambi said.
Moturi was accused of scheming to steal from the workers’ fund through the purchase of shares. NSSF lost the Sh1.2 billion out of undelivered shares that were to have been delivered between 2004 and 2007.
Mugambi said Moturi, who faced a charge of conspiracy to defraud and deceiving, was aware of his criminal intention and enabled the stock brokers to execute the crime through his actions of deceiving NSSF.
The court said he acted in a fraudulent manner instead of assisting his employer NSSF from making fraudulent payments.
Mugambi concurred with the prosecution that the offence calls for a stiffer sentence, adding that Moturi abused a position of trust and authority bestowed on him.
The other convicts David Githaiga, Wilfred Weru and Isaac Nyamongo who are officials of Discount Securities Limited, were each fined Sh802 million in default serve 12 years behind bars.
At the same time, DSL was fined Sh4.8 billion. The court said the firm which is under liquidation, will pay the monies through the statutory manager subject to availability of funds acquired through the sale of its assets.
The defence counsels led by lawyer Assa Nyakundi had argued that there was no evidence to show the convicts benefited from the proceeds of crime.
However, Mugambi said, “it should be remembered DSL a company could not be operated without intervention of human beings who are the accused persons. They directly aided it to the commission of those crimes. They individually authored and signed false letters confirming shares they bought whereas they knew it was false.”
Mugambi held that there was commitment demonstrated through their actions to defraud NSSF through DSL. “There is good reason to hold them equally culpable. If it weren’t for them, the horrendous crimes would not have been committed,” Mugambi said.
In meting out its sentence, the court said none of the accused may be appointed or elected into public office for the next 10 years.
According to court records, Moturi was the head of the user department that was purchasing the shares.
He raised 41 memos to the managing Trustee of the NSSF fund containing misleading statements to the effect that the fund stockbrokers—Discount Securities Limited—had purchased various quantities of shares of Kenya Commercial Banks, Barclays Bank of Kenya, Standard Chartered Bank, Bamburi Portland Cement Company Limited, Kengen and Nation Media Group at the Nairobi Stock Exchange on behalf of NSSF.
This made NSSF to commit to making payments totalling to Sh1.4 billion to DSL yet no shares had been purchased on behalf of the NSSF by DSL.
The charge deceiving principal contrary to section 41 (2) as read with section 48 of the anti-corruption and economic crimes Act states that “A person convicted of an offence under this part shall be liable to— (a) a fine not exceeding one million shillings, or to imprisonment for a term not exceeding ten years, or to both; and (b) an additional mandatory fine if, as a result of the conduct that constituted the offence, the person received a quantifiable benefit or any other person suffered a quantifiable loss”
Moturi was also found guilty on the charge of conspiracy to defraud which attracts a penalty of three years imprisonment.
He faced this count together with Githaiga, Weru, Nyakundi and DSL. The charge indicated that they conspired to defraud the NSSF Sh1.2 billion by purporting to have purchased various quantities of shares of Kenya commercial bank, Barclays Bank of Kenya, Standard Chartered Bank, Bamburi Portland Cement, Kengen and Nation Media Group at the Nairobi Stock Exchange on behalf of the NSSF while no shares had been purchased in respect to this amount.
Mutonyi the acting manager of the Capital and Money Markets at NSSF says when the five were convicted on Friday, she was required by the fund's management to give a statement on how the fund has been impacted by the loss of the money.
To establish the impact of the loss of Sh1.2 billion, she contacted UAP Old Mutual— one of NSSFs fund managers—to analyse how much the NSSF would have gained from an investment of Sh1.2 billion from 2008 to date.
The fund manager she says, used a benchmark bond, which is a 10 year bond, and calculated the compound interest with the assumption that the bond would have been held to maturity.
“The fund manager gave an analysis of the performance of the said bond and gave an estimated cash back of the principal interest totalling to Sh5.5 billion. From the analysis, NSSF lost not just Sh1.2 billion but an estimated Sh5.5 billion as the cumulative loss caused by the effects of the offence,” she said.
-Edited by SKanyara