Central Bank of Kenya has distanced itself from the National Youth Service scandal, where an estimated Sh1.8 billion was stolen.
Governor Patrick Njoroge said CBK only acted as a banker to the Government where it fulfilled its obligation to settle payment requests from ministries and departments.
Suspect payments were made from bank accounts held at CBK, through internet banking, after the requisite log-in credentials of authorised users were entered.
Dr Njoroge yesterday said he was the first person to flag the suspect transactions before informing the Ministry of Devolution.
"We flagged these payments after a bank questioned the payments then we wrote to the Treasury and copied the Devolution ministry," Dr Njoroge said amid public outcry over the supposed involvement of the CBK in the scam.
His position which was intended to absolve CBK from blame now throws the blame back to the ministries of Devolution and the National Treasury – which own and manage the Integrated Financial Management System (IFMIS).
Njoroge said CBK has no powers to alter any payment instructions given by its client - the National Treasury.
"In all these payments, there are trails in regards to the people who approved the NYS payments and the recipients and We do not even know who is being paid," he said.
A decision to centralise all budgeting and payments through IFMIS before actual settlement through internet banking has exposed the system to fraud through collusion of officials and suppliers.