MPs query Waiguru link in fresh Youth Fund scandal

MPs wanted to know why Mr Odhiambo suspended finance manager Benedict Atavachi, a junior officer, and copied the sacking letter to Waiguru and Mangiti.

The Public Investment Committee's (PIC) concern was whether the fund's boss was acting under duress or directives from any quarters, or if there was a cover-up.

"Was this a conspiracy to cover up the theft? Were you acting under duress or instructions from the former CS and PS? Was there a motive?" Kiminini MP Chris Wamalwa sought to know from Odhiambo.

In what could shape up to be another scandal under the Jubilee government, the PIC questioned the handling of the fund following claims of embezzlement of Sh180 million.

The fund was under the Devolution and Planning ministry, which was headed by Waiguru, who has since resigned as Cabinet Secretary, and Mangiti, who is facing charges over the Sh791 million National Youth Service scandal.

Odhiambo, the YEDF board chairman, stunned the MPs when he admitted he unilaterally appointed the chief executive officer, Ms Catherine Namuye, as the sole signatory to the kitty's investment account against the board's recommendation for multiple signatories.

Ten days after the changes, Namuye, who has since been suspended, authorised the Sh180 million payments for consultancy services that MPs were told were never rendered.

Atavachi, the then finance manager, reportedly attracted Odhiambo's wrath when he questioned payments to Quorandum Limited that were made between February and April 2015 in two installments of Sh115 million and Sh65 million.

MPs pressed Odhiambo to explain why he, despite being a non-executive member, suspended Atavachi, who was the whistle-blower, and copied the letter to Waiguru and Mangiti.

MPs Kimani Ichung'wa (Kikuyu), Paul Otuoma (Funyula), Wamalwa (Kiminini), Wafula Wamunyinyi (Kanduyi), Cornelly Serem (Aldai), Olago Aluoch (Kisumu West) and Oburu Odinga (nominated) said the matter is a bigger scandal than NYS and unfortunately, affecting the youth.

The committee heard the Sh180 million was part of Sh400 million that had been invested in a fixed deposit account at Chase Bank.

Atavachi told MPs that he could not access the bank accounts after the CEO was made the sole signatory and asked the House to probe the whereabouts of the Sh220 million balance left in the account.

"This (scam) could run into billions of shillings and make the NYS scandal child's play. This is worse. In the NYS theft, there were some materials and constructions but in the fund's case, money was simply stolen from bank accounts," said Ichung'wa.

The MPs are seeking to find out why Namuye directed the withdrawal of Sh180.9 million from the fund's Chase Bank account number 001705460427 to be paid to Quorandum Limited without the finance department's approval.

Deposit account

"Following the maturity of a fixed deposit account held with your bank, please take this as instruction to debit our account with Sh65 million and make payments to our supplier Quorandum Limited for consultancy services rendered," Namuye directed the bank in a letter dated April 27, 2007.

The fund had invested Sh400 million in the Chase Bank fixed deposit account, which was to mature in two years at an interest rate of 10.5 per cent.

Atavachi denied knowledge of Quorandum Limited having been contracted to offer consultancy or any other services to the fund, informing the MPs that as a former tender committee chair, they never approved such a tender.

"Namuye directed the payments without the finance department authorising or being involved in the processing of the payments," he said.

PIC took Odhiambo to task on why he overstepped his mandate in sacking Atavachi.

While being cross-examined at Parliament Buildings, Odhiambo admitted to acting unilaterally in appointing Namuye as the sole signatory to the bank account.

Angry lawmakers demanded to know why he acted contrary to the board's resolution in changing the bank's signatory.

"I acted unilaterally in accordance with what the management, through the CEO, asked me to do without board approval. When I came on board, there was infighting and difficulties in transfer of funds," Odhiambo told MPs following Ichung'wa's sustained questions.

Odhiambo's admission caused further uproar.

According to a letter he wrote to the bank's two top managers, business development director Ken Ouko and general manager Iman Hussein – by-passing the relationship manager Jedida Kabiru – Odhiambo went ahead to appoint Namuye the sole signatory to the fund.

The suspended CEO authorised the transfer of the money in two installments within 10 days of Odhiambo's letter to Chase Bank changing the signatories.

"The chief executive officer can sign off any instruction. In the absence of the CEO, two signatories must sign, with one being a mandatory signatory," Odhiambo said in the February 17, 2015 letter.

He also gave the names of Namuye and Judy Kimeto, the fund's lending and investment manager, as the signatories for class A accounts and Atavachi, Robert Mrima (senior accountant) and Benson Mutwi (accountant) as signatories of class B bank accounts.