Credit Bank PLC Rocked With Fresh Fraud Claims

Credit Bank PLC is battling an alleged bank fraud that has involved its senior mangers. The Central Bank of Kenya (CBK) and the Anti-Banking Fraud Investigations Unit (BFIU) domiciled under the Directorate of Criminal Investigations have been probing the bank for allegedly defrauding depositor’s money amounting to Sh3, 690,000.

The money in question was sent through RTGS on June 2, 2017 to bank’s client to his Credit Bank Koinange Branch was diverted to a separate account against the payment advise.

A senior official at the bank in collusion with a lady bank client are accused of orchestrating the fraudulent scheme to divert the money to the lady’s company account.

They are also accused of forging signatures of two account holders at the bank including that of the complainant pretending to be joint signatories of the account the money was diverted to.

According to the payment advice, the money was to be transferred to the complainant’s personal account.

Sh500,000 was withdrawn in cash using Office Ventures cheque number 000002 dated July 10, 2017 and the complainant signatures was allegedly forged in pretex that he is a signatory in the account.

The balance transferred to the lady’s personal bank account whois believed to have been used as a conduit to embezzle the money in question.

The complainant has since disowned any knowledge of being a director or shareholder to Office Ventures.

In answering to the claims, the bank’s CEO Betty Korir acknowledged the existence of the matter but insisted it had already been solved. “We wish to advise that the matter has been handled through various channels with the client including but not limited to physical meetings and written communications. Further, the matter was earlier raised through Central Bank of Kenya and was sufficiently responded to.  We confirm that all transactions are handled in accordance with the prudential guidelines.” She told a local publication.

Money Laundering

This is not the first time that the bank has been linked to fraudulent activities, in 2020, the Deputy Director, Head of Offences Against the Person Department at the Office of the Director of Public Prosecutions (DPP) Jacob Ondari ordered an investigation against Credit Bank CEO Betty Korir over alleged banking fraud.

This was after a whistle-blower associated her with money-laundering offences and illegal acquisition of property.

Ondari said in a previous letter dated May 20 seen by Kenya Insights that it was a serious complaint touching on the fraudulent acquisition of property and conflict of interest and money laundering.

The CEO is reported to have used another company to access the funds from China, which were cashed out in suspect circumstances disguised as a business loan.

The CEO is a lawyer by profession and received her apppointment letter as CEO in 2017. Previously she had served as the head of Credit and deputy CEO. She had previously worked for Triodos Bank in the United Kingdom.

Credit Bank is a third tier lender partly owned by former Finance Minister Simeon Nyachae. Top shareholders are Nyachae’s Sansora Group with a 14.96 per cent stake, followed by Sanama Investment (14.34 per cent), Ketan Morjaria (9.88 per cent) and Jay Karia (8.61 per cent).

The former cabinet minister’s wife Grace Nyachae sits on the boards of Credit Bank, Sotik Tea Company Limited, Sansora Group.

Grace served as Mzee Kenyatta’s secretary at State House in 1969.

His son Leon Nyachae sat on the boards of Credit Bank and Sansora Group and was his alternative director at Kenindia where Sansora owned a 7.9 percent stake.

Kenya is categorised by the US State Department as a Country/Jurisdiction of Primary Concern in respect of Money Laundering and Financial Crimes.

Kenya remains vulnerable to money laundering, financial fraud, and terrorism financing.  It is the financial hub of East Africa and is at the forefront of mobile banking.  Money laundering occurs in the formal and informal sectors, deriving from domestic and foreign criminal operations.  Criminal activities include transnational organized crime, cybercrime, corruption, smuggling, trade invoice manipulation, illicit trade in drugs and counterfeit goods, trade in illegal timber and charcoal, and wildlife trafficking.

Cases of internal fraud in banks has seen many Kenyans lose their depositors money and the CBK no longer takes such matters easy. To protect the interests of the depositors, institutions found guilty of any banking fraud are slapped heavily with fines dealing a blow to its reputation while risking a bank run.

Such cases must investigated to the end and results made public for the public’s interest and safety assurances.