Why probe on Sh38 billion Imperial Bank fraud has stalled

Imperial Bank depositors at a past demonstration

By Gitahi Ngunyi

Former Central Bank of Kenya (CBK) governor, Prof. Njuguna Ndung’u and current banking supervision officials who facilitated the Sh38 billion Imperial Bank fraud may go scot-free if the confusion on how investigations on the matter are being conducted is anything to go by.

Three years since the bank was placed under receivership, the office of Director of Public Prosecution is yet to charge Prof. Ndung’u for receiving bribes from the former Imperial Bank Group Managing Director Abdulmalek Janmohammed. Leaked forensic audits reports unearthed a trove of emails showing that Prof. Ndung’u and his wife received bribes from Janmohammed in form of paid for holiday trips to prestigious destinations. The reports also show how other CBK officials played a key role in facilitating the fraud.

Other CBK banking supervision officials who were implicated in the fraud were Peter Gatere, Reuben Cheres, Alex Nandi, Simon Gichuki, Mediline Njeri Kiara and Matu Mugo. CBK has never released the FTI report which would be instrumental to charge these officials, despite spending about Sh2 billion of depositor’s money.

The main indication of the confusion that has hit the investigation is the fact that there is no central agency coordinating the probe on the implicated CBK officials. Our independent inquiry has established that there are three parallel investigations on crimes committed against Imperial Bank depositors by separate government agencies. The three investigations are being conducted Office of Director of Public Prosecutions (ODPP), Directorate of Criminal Investigation (DCI) and Ethics and Anti-Corruption Commission (EACC).

The investigations are also being hampered by competition between the agencies which means there is no co-ordination or sharing of information between them. That is why EACC was caught off guard by the dramatic events surrounding the arrest of Mwilu. Mwilu was arrested on August 29, 2018 for fraudulently substituting securities charged to Imperial Bank.

The confusion seems even bigger at DCI. From our inquiries, we have established the director of criminal investigations, George Kinoti, is not in the picture on the investigation being conducted on the fraud by his own directorate.

When we asked him about the progress on the investigation on the role of CBK officials in the fraud and when charges would be brought against them, Kinoti advised us to seek that information from either KDIC or Banking Fraud Investigation Unit (BFIU) which is domiciled at CBK.

“I suggest you talk to receiver manager Imperial Bank and BFIU director. They are better placed to authoritatively answer,” said Kinoti in his short but respectful response.

BFIU, one of the agencies he referred us to for answers falls under his direct supervision.

Director of Public Prosecutions (DPP) Noordin Haji promised early in May this year that his inquiry into the fraud that brought the bank down had extended to former and current CBK officials. This means that the DPP is conducting his own investigations.

Last week, this news site sought to find out from Haji whether he has made any headway in investigating the role played by Professor Ndung’u. In response, Haji said he would respond to our question but we have to give him some time.

“I’ll respond pls give me time. Thanks,” said Haji in his response to our inquiry.

A few days after the DPP remarks in May, Ethics and Anti-Corruption Commission (EACC) was quoted in The Daily Nation saying the commission was already investigating the banking regulators officials.

Adding to the confusion is KDIC’s reluctance to hand over available evidence on the fraud perpetrators even after the expensive forensic audit done at the expense of the sorry depositors. Notably, there is no will to provide enough evidence to help prosecute W.E Tilley directors and the executive directors of the bank.

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