How managers colluded to 'fleece' National Bank of Sh83m

NAIROBI, KENYA: Details have emerged of how senior officials of National Bank of Kenya colluded with dubious companies to fleece millions of shillings from the financial institutions.

In some of the instances, a company which was awarded a Sh78 million tender for supplying branded furniture had no physical or postal address, and was not among those listed as prequalified vendors, while some companies were paid even before they were registered.

"Indication was clear that the companies were not genuinely engaging the bank. Even their physical address indicated they were located at Njegi House along Tom Mboya Street but when investigators visited the building, they discovered they had never had an office in the building at any given time," said the prosecution report.

The prosecution report was contained in the bundle of documents used to charge former NBK chief finance officer Chris Chepkoit and former acting chief finance officer Wyclife Kivunira over various offences ranging from conspiracy to defraud the bank and abuse of office.

Mr Chepkoit faced a first count of conspiracy to defraud the bank Sh77,960,240 by awarding a contract to supply branded furniture to Sygoin International Holdings Limited without following procurement procedures.

In another count, he was accused of abuse of office where he allegedly used his office to effect payment of Sh21 million to Cedama International Company for supply of electrical items, assorted furniture and tiles without following the bank's payment procedures.

"Between July 2014 and April 2015, he breached the trust placed on him as the chief finance officer by authorising the payments and acting in a manner that was not in the best interest of the bank," read the charge sheet.

Mr Kivunira was separately charged with conspiring to defraud NBK Sh7.8 million by fraudulently taking over a proof of concept for core banking system upgrade contract awarded to MISYS Limited and re-awarding it to Digitronics Solutions Limited.

He was further charged with abuse of office and breach of trust for using his office to award the contract without following procurement regulations.

They both denied the charges and were released on a cash bail of Sh1 million each with the cases scheduled for hearing on July 13.

According to the prosecution, Sygoin International Holdings Limited was registered on May 5 2015, while the contract for provision of branded furniture was approved on August 8 2014 which was several months before it was registered.

"The company was not among the list of prequalified vendors of the bank in order to participate in the procurement process. It did not even appear in the list of the 2013 companies which applied for the contract, which brought questions of how it got the contract," said the prosecution.

In addition, the branded furniture worth the Sh78 million were allegedly imported from China through an agent whose company was not disclosed, and that there was no local purchase orders issued to confirm the quantity of furniture supplied.

The same applied to Cedama International Company which was allegedly not among those listed in the prequalification tender for provision of the electrical items.

"The company did not participate in any procurement process in order to supply the goods. Even the money paid to it was not factored in the budget," said the prosecution.

For Digitronics Solutions Limited, the prosecution said that investigators could not locate its physical address while its registration was done in May 2015, one year after the contract had been approved.