More than half of the companies that have been investigated in the National Youth Service (NYS) scandal delivered nothing but were promptly paid more than Sh1 billion.
Even worse, the companies’ directors told investigators that they were called and offered complete procurement documents despite never bidding for tenders.
This points to the scale of theft from NYS through schemes hatched by senior managers.
By yesterday evening, the directors of 20 firms had given statements that shocked the investigators as it appeared to be a continuation of the previous scandal – perhaps worse.
Sources involved in the probe yesterday confirmed pending arrests of both the recipients and officials who facilitated payments against fake deliveries.
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“Many have told us they were not aware of the tendering process and had never taken part in any,” one officer said.
One of the directors wrote that he was asked to go to the NYS head offices on Thika Road where he was presented with local purchase orders worth nearly Sh60 million.
That was even before he had registered his company and opened a bank account through which payments for the fictitious deliveries would be made.
A clear thread from the statements is that there was no delivery of goods or services despite the fact that payments were received.
Another one told The Standard earlier that she had never done business with the State and wondered how her name and other confidential information had been obtained and used.
“I’m hearing this from you for the first time. I’m not a supplier to the NYS,” she said.
This was before the summons by the investigators were issued, and it was not possible to reach her by phone to determine whether she had recorded any statements with the police.
For the investigating officers, the focus will now shift to the banks that helped to channel the funds out and whether they raised any red flags considering the previous experience where several were penalised.
It is emerging that six commercial banks and their executives could be forced to pay hefty fines for facilitating the NYS pay-outs.
Investigators have narrowed their probe on the institutions, some appearing on the list that was shamed for enabling the theft of Sh791 million three years ago.
Amendments that followed the payments by the youth empowerment agency raised the maximum penalties four-fold to Sh20 million.
Previous fines imposed on bank executives and the institutions were felt as being a slap on the wrist that were too small to be deterrent to prospective offenders.
Detectives tracing the payments have asked that the names of the banks remain confidential until investigations on the roles in enabling the fraud are complete.
Senior Government officials and the recipients of the monies are currently recording statements with the police before possible prosecution afterwards.
Central Bank of Kenya reported the stiff penalties as part of the reforms in the banking sector in a presentation made to the National Assembly last week.
“CBK has strengthened bank supervision through enhancing monetary penalties from Sh5 million to Sh20 million,” the sector regulator said.
Imposing the maximum fines would be the most drastic step in punishing banks for crimes committed by their customers – but with their help.
In the previous scandal, bank executives were taken to court.