Family Bank agrees to pay Sh64.5m fine over NYS scandal

Family Bank has committed to paying Sh64.5 million for its role in the Sh1.6 billion National Youth Service money laundering saga.

This follows a plea bargain agreement with the Director of Public Prosecutions (DPP), in which the bank agreed to plead guilty to failure to report money transactions involving the suspects.

The deal cushions the bank from prosecution on criminal charges.

Appearing before Milimani Chief Magistrate’s court, Senior Assistant Director of Public Prosecutions (DPP) Daniel Karuri said the bank pleaded guilty freely and voluntarily.

“The accused person knowingly, voluntarily, and truthfully admits to enter into this plea bargain and is pleading guilty freely,” reads the agreement.

The bank, through head of security John Muchiri, is expected to plead guilty to six counts of failure to report transactions made by NYS suspects, who include Josephine Kabura.

Court fine

According to the documents filed in court, the bank is expected to pay Sh64.5 million as court fine for the six counts.

Of the amount, Sh24,500,000 will be deposited into an NYS account and the balance of Sh40 million deposited as court fine.

"If the accused person, the bank, fails to comply with the terms and conditions set forth in the plea agreement, the State may fully prosecute the accused on all criminal charges that can be brought against it," reads the agreement dated December 11 and signed by Public Prosecutions Secretary Dorcas Oduor.

The bank had been accused that on December 22, 2014 and May 19, 2015, being a reporting institution, failed to comply with its reporting obligations by failing to report unusual transactions.

The bank had approached DPP three times seeking an out-of-court settlement.

Through lawyers Waweru Gatonye and Cecil Miller, who are representing the bank, Chief Executive Officer John King’ori yesterday asked Senior Principal Martha Mutuku to give them until December 17 to respond to a proposal by DPP Noordin Haji on their out-of-court settlement plea.

They said the defence had lodged fresh negotiations to have the matter settled out of court after the first and second attempts flopped.

“The parties are seeking to settle the matter out of court and we urge the court to give us more time to engage the different complainants from various Government agencies. It has not been possible to conclude the negotiations, but now we hope it will go through,” said Mr Gatonye.

The first request was rejected by former DPP Keriako Tobiko, while the second was rejected by the current DPP Haji.

Proposal letters

The bank has written several proposal letters to the DPP, anti-graft agency, Central Bank Governor Patrick Njoroge and Public Works PS seeking to have the matter settled out of court.

Muchiri has since pleaded to the charges on behalf of the bank.

In the case he is charged alongside former CEO Peter Munyiri, Robert Nyaga (manager), Charles Thiongo (manager), Raphael Ndunda (Head of Risk and Compliance), Nancy Njambi (supervisor), Meldon Onyango (manager) and Josephine Wairi (supervisor).

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