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Sh10 billion irregularly lent to butcher helped weaken shilling, MPs told

By Moses Michira | Nov 13th 2015 | 3 min read
By Moses Michira | November 13th 2015


Patrick Njoroge, Central Bank of Kenya Governor responds to questions when he appeared before the National Assembly's Finance Committee at Continental House, Nairobi yesterday. [PHOTO:BONIFACE OKENDO/STANDARD]

MPs have raised fears that the directors of WE Tilley, a butchery based in Muthaiga that was lent Sh10 billion by the collapsed Imperial Bank, had fled the country for fear of prosecution.

In the newest turn in this unfolding saga, members of the National Assembly’s Finance Committee said the directors were professional borrowers bent on killing commercial banks before fleeing.

“I am informed that the directors of the butchering company have already fled the country,” Shabbir Shakeel said during a meeting yesterday. WE Tilley featured prominently in the probe with the legislators making serious allegations that the borrowed funds were used to purchase US dollars, as part of a wider scheme to create temporary shortage before reselling them at a much higher price.

While Mr Shabbir did not give evidence on the creation of an artificial US dollar shortage, the claims were made in a Parliamentary session – which is privileged.

If the allegations of fraud to destabilise the shilling are found to be true, it could explain the local unit’s high volatility in recent months, whose impact has been felt in every single household.

WE Tilley had earlier been associated with the collapsed Charter House Bank where it was alleged to be transacting huge amounts of money that could not have come from “selling meat”.

Other legislators said the perpetrators of the fraud schemes in both Imperial Bank and Dubai Bank — another collapsed lender — were a major threat considering the magnitude of the theft.

“You might have a very good case but no one to take to court because they will all have fled,” Committee Chairman Benjamin Langat said, concurring with Shabbir.

The MPs had sought answers from Central Bank of Kenya Patrick Njoroge on the steps taken to prosecute perpetrators of the fraud scheme that saw Imperial Bank lend more than Sh38 billion outside the formal banking platform.

“We will not, shall not and are never going to sanitise this fraud,” Dr Njoroge said in response to accusations that CBK was complacent in helping the perpetrators.

Directors of Imperial Bank have been allowed to capitalise their deposits in the bank as a prelude to having the lender resume normal operations within the month. But it is the capitalisation of deposits without first prosecuting the directors and top managers that the MPs are opposed to, as it would amount to sanitising the fraud committed earlier.

“We can’t wait forever to take action but then we must also build a solid case that can withstand the court scrutiny.” CBK had sought court intervention to freeze assets of individuals and companies such as WE Tilley – which has already acknowledged receiving the huge loan from Imperial Bank, the Governor disclosed.

Property used to secure the Sh10 billion loan to the meat processor had earlier been used to secure another credit facility from another commercial bank, lending credence to the tag the directors were “professional borrowers” as branded by the finance committee.

But in another move that could raise the stakes in the probe, the finance committee now wants CBK to produce the inspection reports for both Imperial and Dubai Banks to check for possible collusion with the staff of the Supervision Department.

Mr Langat said separately that former CBK boss Prof Njuguna Ndung’u would definitely be among the witnesses the committee would want to question in their probe.


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