How Youth Fund board set the stage for Sh181m to go missing from its accounts
By Paul Wafula | December 1st 2015
Fresh details have emerged that show the Youth Enterprise Development Fund (YEDF) board sanctioned a change in bank signing instructions at the height of a plot that saw about Sh181 million wired out of the institution’s account.
The revelations now call into question the purpose of the ongoing audit at the fund ordered by the board, and waters down its “We were not aware” line of defence.
Documents seen by The Standard show that YEDF’s board chairman, Bruce Odhiambo, wrote a letter to Chase Bank, where the institution was keeping money in a fixed deposit account, asking for a change in the signing mandate.
The new instructions gave the chief executive exclusive powers to transfer funds from the account.
“The signing instructions are; the CEO can sign off any instructions. In the absence of the CEO, two signatories must sign with one being a mandatory signatory,” the letter, signed by Mr Odhiambo and CEO Catherine Namuye, reads.
This was a departure from the practice that the chief executive would sign alongside the finance manager for any money to be wired out of the account.
The change gave Ms Namuye the headroom to authorise cash transfers to a firm for consultancy services — payments that are now the subject of a Banking Fraud Unit investigation.
The letter was written a week after the YEDF CEO first asked the bank to wire Sh115.7 million out of the fund’s account.
“Following the maturity of fixed deposit held with your bank, please take this as instruction to debit our account with Sh115,710,000 million (Kenya Shillings One Hundred and Fifteen Million Seven Hundred and Ten Thousand Only) and make payment to our supplier Quorandum Limited for consultancy services rendered,” Namuye wrote to Chase Bank.
More than two months after the change in signatories was done, Namuye again wrote to the bank, addressing a general manager, Iman Hussein, and asked for another payment of Sh65.2 million to be wired to Quorandum.
“Following the maturity of fixed deposit held with your bank, please take this as instruction to debit our account with Sh65,184,946 million (Kenya Shillings Sixty Five Million, One Hundred and Eighty Four Thousand, Nine Hundred and Forty Six Only) and make payment to our supplier Quorandum Limited for consultancy services rendered.”
Both letters bear only Namuye’s signature.
YEDF has five authorised signatories. The other signatory classified with the CEO in a “Signatories A” designation is Judy Kimeto, the fund’s lending and investment manager.
A second category, “Signatories B”, has finance manager Benedict Atavachi, senior accountant Robert Mrima and accountant Benson Mutwii.
The scandal at the fund broke last month, after the board announced it had asked YEDF’s chief executive and finance boss to take “voluntary” leave after it was discovered Sh180.9 million was missing.
The board said it had not approved the payments to Quorandum.
But the outcome of the investigations are yet to be made public a month down the line. The board had indicated the outcome would be made public by mid last month.
“As a board, we have various committees to steer, give oversight and put in check various operations of the fund, and it is our audit committee that realised some of the funds had been moved from one of our banking institutions without the knowledge of the board,” Odhiambo told journalists at a press conference at the fund’s head office in Nairobi’s Upper Hill.
“When this was tabled at a board meeting, it was inevitable to bring it to the attention of the Banking Fraud Unit to do an investigation and to give the board a true reflection of the fund’s money movement. The board has decided to ask the senior management to take some leave to allow for investigations.”
Odhiambo maintained the board was not levelling any accusations against the fund’s top executives until investigations are completed.
“We did not approve the wiring of such amounts and that is why when the allegations were made, we got concerned,” Odhiambo said.
Namuye was appointed CEO in July 2014 after holding the position in an acting capacity for more than a year.
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