Banks pay Sh385m in fines for facilitating theft of NYS funds


Kenya’s chief prosecutor has struck an out-of-court deal with five banks involved in the Sh11 billion National Youth Service scandal, which has seen the lenders refund the taxpayer Sh385 million.


Standard Chartered Kenya, Equity, Diamond Trust, Co-operative Bank, and Kenya Commercial Bank have collectively refunded Sh385 million to government, just a fraction of the Sh11 billion that was lost through the scandal.

PENALTY

The five banks last year paid a total of Sh271 million in fines for failing to report suspicious transactions to the Central Bank of Kenya as required by the Banking Act and the industry regulator's guidelines.


Director of Public Prosecutions Noordin Haji on Thursday said his office opted for the deal because the banks and their managers were not directly involved in the plunder of NYS.

Their only crime, he said, was failure to report suspicious transactions.


In the deferred prosecution arrangement, bank managers who were targeted for prosecution will now get a reprieve, as plans to charge them in court for aiding money laundering have been put on hold.


"You will be seeing more of this between us and banks where you will see that prosecution is not the only option in regard to graft and money laundering," Mr Haji said on Thursday in Nairobi.


“If they continue breaching the agreements we have made, then we shall prosecute them. This is the first deferred prosecution deal in Kenya.”


At the press conference also attended by Directorate of Criminal Investigations boss George Kinoti and Ethics and Anti-Corruption Commission chief Twalib Mbarak, Mr Haji held that the other cases involving the scandal will proceed in court.


Mr Haji and Mr Kinoti also downplayed an alleged rift between their offices over the prosecution of Kenya Ports Authority boss Daniel Manduku, arguing that investigations into the State corporation are still ongoing.


This article was originally published on The Daily Nation.

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