New record in war on graft as NSSF fraudsters are fined Sh9.6b
By Paul Ogemba
| Feb 1st 2022 | 4 min read
A magistrate yesterday bolstered the war against corruption by setting a new record of Sh9.6 billion in fines for four individuals and a company that defrauded the National Social Security Fund of Sh1.2 billion.
The ruling by anti-corruption chief magistrate Lawrence Mugambi comes as a painful lesson for former NSSF Investment Manager Francis Moturi - a public servant - and three managers of a private company, Discount Securities Limited. Moturi, David Githaiga, Wilfred Weru and Isaac Nyamongo will either have to pay the fine or serve 14 years in prison each.
The shock ruling is likely to send cold shivers across other corruption networks as the magistrate showed no mercy when he fined the graft lords almost nine times the Sh1.2 billion that they stole from pensioners through fraudulent transactions done in 2008. Their scheme involved buying shares of listed companies through Discount Securities Limited.
When he settled down to pass the sentence, Mugambi did not mince his words. He went straight to the point and delivered the shocker in less than 30 minutes to a packed courtroom. His verdict left the convicts and their relatives flabbergasted.
“One cannot lose sight of the fact that there was massive loss of public funds where a whopping Sh1.2 billion belonging to pensioners was involved. If it was not for them, this horrendous theft would have not happened,” ruled Mugambi.
His ruling was a culmination of 12 years of prosecution since the convicts were charged for the theft which almost crippled operations at NSSF.
Investigations into the scandal started in 2008 when the Ethics and Anti-Corruption Commission (EACC) received a report that NSSF had lost Sh1.6 billion through irregular trading in shares through Discount Securities Limited.
After completing investigations, EACC recommended charges against seven individuals, three of who were acquitted for lack of evidence on Friday last week when the magistrate delivered the judgement. One of the suspects did not live to hear the magistrate acquit him as he before the trial was concluded.
Those acquitted were James Akoya, a former NSSF General Manager for Finance, and Mary Ndirangu, a former NSSF Internal Audit Manager. William Murungu, the director of Discount Securities Limited, died in the course of the prolonged trial.
Moturi, who served as the pension fund’s investment manager, will have to carry his cross alongside David Githaiga, a director at Discount Securities Limited, Weru, the company’s Finance Manager and Nyamongo who was the company’s Investment Manager.
He was found convicted on two counts of conspiracy to defraud and deceiving principal in which it was proved that he used his position at NSSF to lie about his dealings with Discount Securities Limited, leading to the loss of the colossal amounts that was meant to benefit senior citizens in their sunset years.
Githaiga, Weru, Nyamongo and Discount Securities were found guilty of two counts of fraudulent acquisition of public property and conspiracy to defraud NSSF of Sh1.2 billion.
Discount Securities, though in liquidation - and currently under statutory management under the Attorney General’s office - suffered the heaviest punishment after it was fined four times the amount lost at NSSF.
“The company was the biggest beneficiary of the scheme to defraud NSSF and acquired public property through corruption. They are condemned to pay a fine of Sh4,804,573,489 which is four times the amount the State agency lost,” ruled Mugambi.
Moturi being the investment manager and the one who oversaw the deal between NSSF and Discount Securities Limited suffered the second-highest punishment after being fined a total of Sh2,404,286,774 or serve a jail term of 14 years.
On the first count, he was convicted for conspiracy to defraud. Mugambi fined him Sh1 million or two years in jail while in the second count of deceiving principle, he got a three-year jail term or a fine of Sh1 million.
However, the heaviest punishment was in the additional sentence in which the magistrate ruled that his actions made NSSF lose a quantifiable amount of Sh1.2 billion. He fined him twice the amount totaling Sh2.4 billion. Should he fail to pay the fine, he spend the next nine years in jail.
“He acted in the most careless and uncaring manner and ended up breaching the trust bestowed on him by virtue of his position. He individually wrote false letters and invoices that public funds had been paid out but it was a scheme to defraud NSSF,” ruled Mugambi.
Mugambi further ruled that although Githaiga, Weru and Nyamongo - will also pay a fine twice the amount lost from NSSF which totals to Sh2.4 billion, the fine will be divided among them. Mugambi directed that each pays a fine of Sh802 million, failure to which they will serve a mandatory 14 years in prison each.
“Their company was just an entity that could not do anything without their touch and involvement. They individually facilitated the conspiracy and ended up causing NSSF to lose a quantifiable amount which they must be punished for,” he ruled.
His decision overshadowed the previous record in anti-corruption cases where Sirisia MP John Waluke and ambassador Grace Wakhungu were fined a total of Sh1.5 billion for defrauding the National Cereals and Produce Board of Sh297 million through a maize importation scandal.
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