Detectives grill former NBK bosses for eight hours for banking malpractices

Four former National Bank of Kenya (NBK) top managers were yesterday questioned by police over claims of banking malpractices. This came as senators criticised the closure of Chase Bank.

Chase Bank’s Group Managing Director Duncan Kabui and Chairman Zafrullah Khan were also quizzed by the detectives for the second time in three days. The managers, who were accompanied by their lawyer Cecil Miller, left the Directorate of Criminal Investigations after nine hours.

The former NBK officials were led by lawyer Paul Muite when they presented themselves before the Directorate of Criminal Investigations as directed by Inspector General of Police Joseph Boinnet.

Sacked NBK Managing Director Munir Ahmed, chief finance officer Chris Kisire, chief credit officer George Jaba, and acting chief finance officer Wycliffe Kivunira spent more than eight hours with the detectives answering questions regarding lending while in office.

Former National Bank Managing Director Munir Sheikh Ahmed speaks during the official opening of the Kericho branch. He along with three other former National Bank of Kenya (NBK) top managers were yesterday questioned by police over claims of banking malpractices. (PHOTO: FILE/ STANDARD)

The bank made a loss of Sh1.2 billion in the last financial year. Police are investigating claims of bad practices that could have contributed to the losses. Sources said they all denied any wrongdoing.

Officials said ICT director Mohammed Abdalla and executive director Boniface Biko were away but promised to present themselves later.

Their identification documents, including passports, were confiscated by police.

Director of Criminal Investigations (DCI) Ndegwa Muhoro said they were still talking to various parties in the case before they decide on possible charges to be preferred, if any.

“This is a long process that is progressing well. We have opened investigation files and it will take time to know the way forward because there are many other people to talk to,” he said.

And the Senate Finance Committee yesterday criticised the “speedy action” by Central Bank of Kenya Governor Patrick Njoroge to shut down the troubled Chase Bank.

The committee said the decisive move, plus the closure in the past of two other banks – Dubai and Imperial Banks – had occasioned more harm to the innocent depositors, as opposed to the institution’s directors who should be punished.

Committee Chairman Billow Kerrow, who is also the Mandera senator, said that when a financial institution is going under, the Central Bank should first focus on the interests of depositors, who are always at risk of losing their savings in the event of a closure. “Inasmuch as the bank directors have a responsibility as well the management to ensure safety and custody and always be responsible for the losses, we are concerned that the CBK Governor has acted in a hasty and irrational manner,” said Kerrow.

Nyeri Senator Mutahi Kagwe accused Njoroge of overreacting, saying while directors of the bank should be punished for poor insider-lending regime, it did not necessarily mean that Chase Bank should have been closed.

Governor overreacting

“The Governor should not be using a Bazooka to kill a fly. He is overreacting. We are wondering whether his action was taken in the best interest of depositors. We know what happens in this country when a bank is closed,” said Kagwe.

Kerrow said the closure of the three banks had led to withholding of over Sh150 billion of depositors’ money, which had a big impact on the stability of the economy.

The senators further urged the CBK Governor to probe possible connivance between regulatory officials and Chase Bank management, saying the irregularities cannot have been without the knowledge of some elements in CBK.

“CBK is not a scarecrow in a maize field. It is supposed to provide cushion to depositors,” said Machakos Senator Mutula Kilonzo Jnr.

Kilonzo proposed that while the criminal process against managers and directors responsible for the mess was ongoing, the State should attach their properties to ensure they do not flee.

Kilonzo said it was questionable that the Chase Bank mess was not detected earlier, adding that former Governor Andrew Mulei had installed a comprehensive system to flag anomalies.

“Kenyans paid dearly for this system that is supposed to do trouble-shoot in the banking industry. It can only be that some people within CBK are conniving with those keen on looting depositors’ funds and we need to see these elements punished,” he said.

Senate Majority Whip Beatrice Elachi questioned how auditors had given banks clean bills of health only for them to go under in a matter of months.

“There has to be a collusion that also ropes in auditors, otherwise how does such a mess happen when auditors had given such a clean bill on the financial institution?” she posed.

On Friday, Boinnet issued arrest orders against two Chase Bank managers and six senior managers at the equally troubled National Bank after they all defied an order to surrender themselves to the police.

Mr Boinnet had ordered the arrests, accusing the managers of engaging in unethical conduct, including illegal lending to themselves and to their cronies in disregard of all guidelines.

“I have, therefore, ordered the immediate arrest of the following persons, or in lieu, they must present themselves to the Directorate of Criminal Investigations headquarters by 3.30pm today (Friday).”

Zafarullah and Kabui spent the better part of Saturday at DCI headquarters. Chase Bank was placed under receivership last Thursday.