Banking fraud costs public, private sector Sh1 billion

By Mwaniki  Munuhe

KENYA: The Government and the private sector organisations have lost about Sh1 billion to fraudsters over the last one year.

At least Sh1,086,500,980 was lost between January and December last year, The Standard On Saturday has authoritatively established.

Data from Central Bank’s Banking Fraud Investigations Department (BFID), reveals that the massive fraud was executed through stolen and forged cheques, counterfeit cards, money transfers, loan frauds, online fraud, and embezzlement among others.

But the Government only recovered Sh429.4 million. The report indicates that crime levels intensified towards the festive season. In the months of November and December alone, Sh461.8 million was lost to fraudsters although about Sh101.9m was recovered.

Suspects charged

An internal memo addressed to CBK Governor Njuguna Ndung’u and signed by BFID director Gabriel Mbuvi reads in part: “Forwarded for your information, please find the monthly crime returns for the month of December, 2012. The cases were reported from various commercial banks, other financial institutions and various sectors both government and private.”

In December, 52 cases of various forms of fraud were reported to BFID leading to recovery of Sh93 million representing 43.3 per cent of the amount involved. But 25 of the cases were successively investigated and key suspects charged while 27 of them are under investigation.

One of the cases in court involves a leading law firm accused of defrauding the Co-operative Bank of Sh49.6 million.

The Standard On Saturday further established that in November, last year, 57 cases involving Sh247.1 million were reported with 21 of them successfully investigated and key suspects charged while 36 were still pending.

A previous memo in our possession communicating crime returns for the month of November, sent to Ndung’u indicates that only Sh8,869,928.85 representing 3.59 per cent of the stolen cash was recovered.

The memo, signed by Abdallah Komesha on behalf of BFID director read in part: “Forwarded for your information, please find the monthly crime returns for the month of November 2012.

The cases were reported from various commercials banks, other financial institutions and various sectors both Government and private. Fifty seven cases were reported during the month under review. Twenty one cases were successfully investigated and accused persons charged before various courts.”

“Sh247,190,784.61 was involved and Sh8,869,928.85 representing 3.59 per cent was recovered.”

In order to minimise fraud, some leading commercial banks and financial institutions have introduced an automatic text message transfer systems that alerts account holders each time a transaction is executed using their ATMs.