The NYS fraud ghosts continue to haunt down senior managers of Family Bank for non-disclosures over suspect millions of shillings deposited in the financial institution after they lost an appeal against their prosecution.

Family Bank and two of its senior managers have lost an appeal against their prosecution for money laundering in the NYS saga.

David Thuku, the bank’s Managing Director, and Rebecca Mbithi, Head of Legal, will now face charges for the bank’s role in the NYS plunder.

They had first mounted a challenge against their prosecution at the high court where judge Edward Muriithi dismissed them.

On appeal, judges Alnashir Visram, Wanjiru Karanja and Martha Koome further dismissed the Family Bank managers stating:This is the matter that fell for hearing before (justice)Muriithi … as expected in a matter of this nature strong opposition was put up by the 1st, 2nd and 3rd respondents. Upon hearing all the parties and by a ruling delivered and dated the 16th December, 2016 the learned Judge dismissed the application and ordered that costs do abide the outcome of the petition.

Similar crime

The bank illegally paid out huge sums of money from the Ministry of Public Service, Youth and Gender Affairs State Department for Public Service and Youth to shadowy entities and individuals.

This is what the justice Muriithi  stated in his own words;
Prosecution of the Petitioners and the Interested Party, the charges for whose prosecution evidence is allegedly established by concluded investigations must be allowed to proceed, and the other banks and persons involved must be prosecuted when evidence on their involved (sic) is crystallized by the investigations directed by the DPP on the 21st November, 2016. It is not public interest to halt prosecution of an alleged offender, the evidence to support whose charge is available in order to await investigations to establish evidence that may support the charge of others who are alleged, whether by the prosecutor or the alleged offender, to have been similarly involved in like offence. Where such investigations take time as in the case here where investigations commenced in 2015, it may be that the prosecution is inordinately delayed awaiting the finalization of the investigations into the involvement of other persons alleged to have separately been involved in similar crime.

Cash withdrawals

The theft of Ksh791,385,000 from the National Youth Service (NYS) in 2015 necessitated investigations which revealed that the funds were transferred to bank accounts of companies operated by Josephine Kabura as the sole proprietor.

Reinforced Concrete Technologies received Ksh320,160,000 from the NYS between February 5, 2015 and January 21, 2015.

Home Builders received Ksh 218,925,000 between December 22, 2014 and January 21, 2015.

Roof and All Trading had Ksh252,150,000 deposited into its account from the NYS between February 5, 2014 and March 27, 2015.

After the deposits were made, Josephine Kabura made large cash withdrawals- the highest being Ksh52,000,000.

Other deposits were made in the same bank in accounts owned by one John Kago Ndungú, after which they were subsequently transferred to various bank accounts.

Combating terrorism

The parties gave no explanations for the large cash transactions and the bank failed to report the suspicious transactions, an offence under the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA) and Central Bank of Kenya (CBK) Prudential Guidelines on Anti –Money Laundering and Combating the Financing of Terrorism.

In 2016, the Director of Criminal Investigations carried out investigations and forwarded the report to the Director of Public Prosecutions who sought “expert assessment from CBK.”

“While it cannot be stated with certainty the likely effect a decision to prosecute FBL for non-compliance with reporting obligations would have on the bank or the banking sector, we can only comment as follows… the prosecution of Family Bank and all other related parties involved for non-compliance with reporting obligations is unlikely to have a negative impact on the bank and the financial sector. On the contrary, it will have a positive effect on the sector as it will underscore accountability and enhance compliance,” The CBK Governor Patrick Njoroge said in his response to the DPP.

The DPP found Family Bank to have contravened the reporting obligations and was therefore criminally culpable for the offence of failure to report suspicious transactions that could constitute or be related to Money Laundering or the proceeds of crime.

Recommendations were thus made to charge the responsible officials with the offences of contravening the provisions of POCAMLA and aiding and abetting the commission of the offence of Money Laundering through opening numerous accounts, authorizing suspicious transactions and failing to report cash transactions above US$ 10,000 and the suspected 7 officials of the bank were named and recommended for criminal prosecution.

With others not before court

The bank’s officials filed a Constitutional Petition in the Constitutional and Human Rights Division of the High Court seeking to stop their arrest, detention or prosecution for the alleged offences saying that would contravene their right to a fair trial.

Judge Muriithi, however, dismissed their petition saying “the charges for whose prosecution evidence is allegedly established by concluded investigations must be allowed to proceed, and the other banks and persons involved must be prosecuted when evidence on their involvement is crystallized by the investigations directed by the DPP on November 21, 2016.”

The judge had ruled that it is not public interest to halt prosecution of an alleged offender, the evidence to support whose charge is available in order to await investigations to establish evidence that may support the charge of others who are alleged, whether by the prosecutor or the alleged offender, to have been similarly involved in like offence.

“On our part, we find ourselves in agreement with the above findings as we appreciate that in undertaking prosecutorial duties, the DPP is supposed to subject the material forming part of the evidence to some examination before charging a person with a criminal offence. It is necessary also to recognize that the DPP relies largely on investigations carried out by the police, and in doing so, he can direct as he did in this case the police to seek clarifications, further information or comments,” the Court of Appeal judges said in their ruling.

On whether the bank and its officials were subjected to differential treatment bearing in mind there were 27 other banks and also the CBK itself that were implicated in the said offences, the Court of Appeal was not persuaded Family Bank was subjected to differential treatment as many criminal proceedings are initiated against an accused person(s) alleged to have committed an offence either alone or with others not before the court.