Wednesday, October 28, 2015 10:08 pm
Fraudulent withdrawals and other illegal transactions amounting to 34 billion shillings (335 million dollars) over a period of 13 years at Imperial Bank have been discovered.
The discovery was made known on Wednesday by the bank’s receiver in a lawsuit filed at court.
Kenya’s central bank ordered privately-owned Imperial Bank to be put under management this month after the board alerted it to malpractices at the mid-sized lender.
Shortly before it was taken into receivership, the bank had appointed an acting managing director after his predecessor Abdulmalek Janmohamed died in September.
The lawsuit said that from 2002 to September 2015 Janmohamed “was exerting his influence to siphon and direct” about 34 billion shillings to defendants or respondents in a “fraudulent scheme.”
The central bank said on Tuesday the receiver had uncovered “substantial” fraud, without saying how much.
It also said the bank was still viable and shareholders were considering plans to inject capital to reopen it in a month.
The lawsuit documents seen by media said “fraudulent withdrawals” by the defendants were hidden from the bank’s reporting system through software manipulation.
It also said some transactions had been written down on paper.
The lawsuit, filed on behalf of the bank’s receiver Peter Gatere, said the funds were invested in prime real estate, luxury apartments and assorted firms.
More than 20 companies and a number of individuals were linked to the fraudulent activities that began in 2002, the court documents seen by media showed.
They also showed that the lawsuit was pursuing beneficiaries of the estate of Janmohamed.
According to the court documents, one of the companies admitted to receiving 10 billion shillings from Imperial Bank and had offered properties to guaranty repayment.