Family Bank Accused Of Sh45M Public Funds Fraud

In her report for the year ending June 2021, Auditor General Nancy Gathungu has revealed how taxpayers could’ve lost Sh45 million in a bitched deal between Information Communication Technology Authority (ICTA) and Family Bank.

The money was part of unsecured loans that were lent to various startups that were executing various programmes under the digital villages programme.

The loans popularly known as Pasha Loans were advanced by the Mwai Kibaki government to enhance the growth of ICT, tapping into the National Optic Fibre Infrastructure (NOFBI).

In the contract between ICTA and Family Bank, the latter was to assess the loan recipients, disburse the funds and follow up on recovery.

But out of the Sh128 million that was lent, the bank has remitted Sh82 million, leaving a balance of Sh45 million.

The Auditor General in her report cast doubt the monies would be recovered.

MPs at the Public Investments Committee on Commercial Affairs and Energy have begun a probe into the matter following the query.

Pokot South MP David Pkosing Who’s the committee’s head accuses Family bank of fraud, “

“Nobody can fail to explain the loss of Sh45 million just like that. The bank is a suspected of sinking Sh45 million. ICTA has said it was the responsibility of the bank,” Pkosing said.

This was after Family Bank CEO Rebecca Mbithi while appearing before MPs on Thursday, said they have been unable to recover the money.

“The money is with the people….the people who were lent by the bank,” she said.

Mbithi further revealed that the bank has since closed the account and the same was acknowledged by ICTA.

The bank argued that the contract had a clause which provided that ICTA could terminate the contract by giving the bank 30 to 60 days’ notice.

On termination, ICTA was to pay any advances still outstanding. The funds issued to start-ups were not secured. The bank was to vet applicants for approval by ICTA.

MPs have given the bank up to July 20 to file a proper response to the queries after Mbithi failed to respond to questions about how the bank won the tender.

“Everything happened after the agreement. They have no evidence they defended themselves in the contract bidding in the first place,” Pkosing said.

The MP maintained that “The bank is a suspect of sinking Sh45m of taxpayers’ money. It can only get out of that by explaining and showing everything was done above board,”

MPs told the bank managers to work their ways to clear the query – or simply pay back the cash.

“You must return this money. You cannot get away with it just like that and take it casually as we see,” Rangwe MP Lillian Gogo said.

“It is the bank that interacted with the beneficiaries and knows where they are. What were they looking at since the loans were unsecured?” Ganze MP Tungule Charo asked.

Wajir West MP Farah Yusuf Mohamed asked, “Before entering an agreement with ICTA, was there an advert? Why did ICTA terminate the contract?”

“They say they were to vet applicants and recover loans…vetting they might have done but still failed and now Sh45 million taxpayers money is missing,” he added.

MPs further observed that the “contract has serious gaps.”