House team grills Barclays Bank staff over Sh791m NYS fraud

November 2, 2016 6:54 pm
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The House watchdog committee invited the bank managers led by Jeremy Awori to assist it to know the names and the bank statements of all individuals and businesses that received money from NYS in 2013/14 and 2014/15 financial year/FILE
The House watchdog committee invited the bank managers led by Jeremy Awori to assist it to know the names and the bank statements of all individuals and businesses that received money from NYS in 2013/14 and 2014/15 financial year/FILE

, NAIROBI, Kenya, Nov 2 – National Assembly Public Accounts Committee (PAC) on Wednesday grilled top managers of the Barclays Bank in camera over transactions relating to the loss of Sh791 million at the National Youth Service (NYS).

The House watchdog committee invited the bank managers led by Jeremy Awori to assist it to know the names and the bank statements of all individuals and businesses that received money from NYS in 2013/14 and 2014/15 financial year.

The MPs also wanted evidence on whether the bank conducted due diligence in handling of the NYS funds and proof that disciplinary action was taken on any staff involved in the fraud.

The Bank’s lawyer Cecil Miller asked the Committee to conduct the hearings in private given that he was going to release the names of persons who transacted with the bank in connection to the proceeds of NYS.

The Committee members led by the Chairman Nicholas Gumbo (Rarieda) granted the bank’s request to be heard in camera, but the Kitutu Masaba MP Timothy Bosire pleaded that the proceeding be held in public but eventually allowed the lender to present its case in a closed session.

Miller drew the attention of the legislators that the CBK prudential guidelines prohibit banks from disclosing client information to third parties.

“We want to apply that the bank qualifies for exceptional circumstances to sit in camera. The bank is under obligation to keep information of customers confidential,” Miller explained.

“We have sensitive information and we are wary of protecting the bank clients. We cannot expose customers and the institution.”

He said the issues raised in invitation by PAC bring in other entities including bank clients who are not necessarily subject of the investigations.

“The bank will fall foul of the rule of confidentiality. I am aware the committee has allowed other banks to submit information in camera,” said Miller.

“In as much as matter is in public domain, the client information in our bundles that we have brought here are not in public domain.”

The Banking Fraud Investigation Unit (BFIU) has flagged five accounts at Kenya Commercial Bank (KCB), four at Barclays, two each at Standard Chartered and Chase Bank and one each in Prime Bank, Paramount Universal Bank, Family Bank, Commercial Bank of Africa, K-Rep and Diamond Trust Bank.

The NYS scandal first came to light in June after it was discovered that about Sh800 million had been irregularly transferred from NYS’ Integrated Financial Management System (IFMIS) accounts to a supplies company for procurement of building materials.

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