CBK on the spot over Sh180m fraud at youth fund

The Central Bank of Kenya (CBK) has been sucked into the Sh180 million fraud at the youth fund for failing to stop suspicious transactions.

The bank's Financial Reporting Centre (FRC) is on the spot for not promptly averting further loss of funds after the transacting bank raised a red flag when it received instructions from former acting Chief Executive Officer of Youth Enterprise Development Fund (YEDF) Catherine Namuye, to pay Sh115 million to Quorandum Limited.

Another Sh65 million was also paid to the said consultancy firm to design a comprehensive ICT strategy and enterprise resource planning (ERP) design, which it has since been established, was a sham.

Yesterday, the National Assembly's Public Investment Committee (PIC), which is probing the fraudulent amount paid to Quorandum consultancy, learnt that the firm opened an account with Chase Bank in 2013 and only had Sh3,000, raising suspicion when Ms Namuye ordered the transaction.

Further, the invoices and the contractual agreements tabled before the committee by the bank, and those submitted by Quorandum Managing Director Mukuria Ngamau differed.

Cross-examination

The MPs were baffled during the cross-examination when the bank denied knowledge of a Sh115 million transaction it executed on behalf of Mr Ngamau to Donnie Collins Reeves, who was the lead consultant for Quorandum. Instead, what caught their attention was 57,000 dollars paid to a foreign company for the supply of excavators and breakers.

According to Chase Bank Director of Public and Regulatory Affairs Parmain ole Narikae, they alerted FRC that only Sh6 million had been withdrawn from the firm's account, leaving a balance of Sh109 million.

The bank, it emerged, was not satisfied with Namuye's instructions and sought further clarification as a precautionary measure, including freezing Quorandum's account.

PIC Vice Chairman Aden Keynan (Eldas), and members Kimani Ichung'wa (Kikuyu), Wafula Wamunyinyi (Kanduyi), Paul Otuoma (Funyula), Abdulswamad Nassir (Mvita), Thomas Mwadegu (Wundayi) and Oburu Oginga (nominated) queried why the CBK did not act.

"The FRC was established under the anti-money laundering and economic crimes law to prevent loss of public funds by closely monitoring suspicious transactions and has powers to even withhold the said funds. Why didn't it act?" questioned Mr Oginga, a former Finance assistant minister.

Mr Nassir said on the face of it, it appeared Quorandum's account was opened to swindle public funds on false pretenses.

The committee has summoned CBK Governor Patrick Njoroge.