Police seek NIS help to probe bank officials

Police investigating bank officials over alleged financial crimes have requested the help of the anti-corruption agency and National Intelligence Service.

The invitation is contained in a confidential memo authored by the Directorate of Criminal Investigations (DCI) seeking a multi-agency investigation on the eight bankers who worked for Chase Bank and National Bank of Kenya.

Kenya Revenue Authority, the Financial Reporting Centre and the Asset Recovery Authority are the other agencies whose help the police require to trace the cash from the two banks.

"...he (Ndegwa Muhoro) has deemed it necessary the investigation be escalated to multi-agency investigators due to its sensitivity and public interest," reads the memo signed by John Kariuki, the head of investigations at the DCI.

Mr Muhoro is the director general of the DCI, the investigating arm of the Kenya Police Service.

Mr Kariuki says in the letter dispatched yesterday that his request should be considered during the next multi-agency meeting or as soon as possible.

The memo also indicates that the DCI may already have been overwhelmed by their findings so far, from the statements recorded by the suspects.

Meanwhile, MPs have concluded debate on a proposed law to control bank rates to protect borrowers and guarantee higher returns for depositors.

The Banking Amendment Bill seeks to cap interest rates at no more than four per cent of the base rate set and published by the Central Bank of Kenya (CBK). The Bill

Sponsored by Kiambu MP Jude Njomo, the bill also proposes to peg the minimum interest earned on deposits to at least 70 per cent of the base rate.

MPs unanimously backed the proposed law during debate that saw them discuss the banking industry crisis following closure of three banks–Chase, Imperial and Dubai.

Discussions on the proposed law came a day after the House Finance committee was directed to investigate the banking crisis within 30 days.

Yesterday, Likuyani MP Enock Kibunguchy said some of the banks were like pyramid schemes.

"When you deposit your money, you get peanuts in return but when you borrow the banks make a killing from you," said Mr Kibunguchy.

Suna East MP Junet Mohamed attributed defaults in loan repayments to the high interest rates.

"It is common sense that if you overcharge people then you will likely get many bad loans. Common sense will let you know that if one has difficulty repaying Sh200,000, then it will be harder for the same person to repay Sh1 million when the interest rises," said Mr Mohamed.

Budalang'i MP Ababu Namwamba wondered why CBK had not had a full board of directors for a whole year. "Was it a lacuna for things to fail?" said Mr Namwamba.

He said the country, with over 40 banks, was suffering from saturation as bigger economies such as South Africa had only 15 banks.

Gem MP Jakoyo Midiwo said it was only in Kenya where banks, which were declaring losses in their home countries, were earning super profits.

Westlands MP Tim Wanyonyi said Kenyans had resorted to shylocks who were operating without parameters.

"I have never heard of a bank making losses even when the economy is stalling. The high bank charges have led Kenyans to resort to shylocks who are in turn further fleecing them," said Mr Wanyonyi.

Kimani Ichungwah (Kikuyu) said it is important to investigate whether former CBK Governor Njuguna Ndung'u was complicit in the current banking quagmire.

"It is clear that that there was complicity; the current governor must clean up the bank's supervisory arm; we need to strengthen the regulatory position," said Ichungwah.