Youth Fund Chairman admits mistake in KES 180 M theft
01 March 2016, 18:24
Nairobi – The Devolution Ministry has been hit by another scandal after it emerged that the Youth Enterprise Fund chairman, Bruce Odhiambo acted unilaterally in appointing suspended chief executive officer as the sole signatory to a bank account resulting in the theft of KES 180 million.
Odhiambo was hard-pressed by MPs to explain why he went against a board resolution that sought to increase the number of bank signatories for the Fund investments accounts. Instead, he went ahead to appoint Catherine Namuye, a former CEO as the sole signatory to the fund.
“I acted unilaterally in accordance with what the management, through the chief executive officer asked me to do without board approval,” Odhiambo admitted to MPs after tough questioning by Kikuyu MP Kimani Ichung’wa.
He sought more time to provide proper information after the Public Investments Committee (PIC) chaired by Adan Keynan (Eldas MP) threatened to declare him a hostile witness and recommend his arrest for the loss of public funds.
It emerged that Odhiambo and Namuye side-stepped Chase Bank Relationship Manager Jedida Kabiru and dealt with the bank directors in transferring the millions of shillings.
Namuye, who is on suspension, transferred the money in two installments 10 days after Odhiambo wrote to Chase Bank informing its managers of the change of bank signatories.
“The chief executive officer can sign off any instruction. In the absence of CEO, two signatories must sign with one being a mandatory signatory,” Odhiambo instructed Imam Hussein, of Chase Bank in a letter dated February 17, 2015.
He also gave the names of Namuye and Judy Kimeto, the Lending and Investment Manager at the Fund as the signatories for class A accounts, and Bendict Atavachi (Finance Manager), Robert Mrima (Senior accountant) and his deputy, Benson Mutwii, as signatories of class B bank accounts.
PIC demanded to know why Odhiambo overstepped his mandate in sacking Atavachi after he blew the whistle on the transfer of KES 115 million and KES 65 million to an account and Quorandum Limited, a firm that did not do any business with Youth Enterprise Fund.
Atavachi said Chase Bank paid an interest of KES 8 million on the KES 400 million that had been invested in the fixed deposit account. He said the interest should have reduced after the transfer of KES 180 million.
He said he could not access the bank accounts after the CEO was made the sole signatory and asked the House to probe the whereabouts of the balance of KES 220 million that was in the account prior to his suspension.
The MPs also questioned the circumstances under which Odhiambo copied the suspension letter of Atavachi, a junior fund manager to former Devolution Cabinet secretary Anne Waiguru and PS Peter Mangiti.
They said the mandate of suspending the officer should have been executed by the chief executive officer and not the non-executive board chairman.
The MPs are probing how Namuye directed the withdrawal of KES 180.9 million from the fund board Chase Bank account number 001705460427 between February and April 2015 which went to Quorandum limited for alleged consultancy services.
“Following the maturity of fixed deposit account held with your bank, please take this as instruction to debit our account with Sh65 million and make payments to our supplier Quorandum limited for consultancy services rendered,” Namuye directed Chase bank in a letter dated April 27, 2007.
The fund had invested KES 400 million in Chase Bank fixed deposit account which was to mature in two months at an interest rate of 10.5 per cent.
Atavachi denied knowledge to Quorandum Limited having been contracted to offer consultancy or any other services to the fund.
He said Namuye directed the payments without the finance department authorizing or being involved in the processing of the payments.
Keynan and committee members accused Odhiambo of being a hostile witness after he refused to respond to questions.
“The consequences if we declare you a hostile witness are dire. You will end up being prosecuted. Please respond to all the questions,” warned Keynan.
MPs Cornelly Serem (Aldai), Wafula Wamunyinyi (Kanduyi), Chris Wamalwa (Kiminini) and Paul Otuoma (Funyula) claimed the Youth Fund theft is more than the KES 971 million NYS scandal.
“This could run into billions of shillings and make the NYS scandal a child’s play,” Mr Ichung’wa said.
He said in the NYS theft, there were some visible materials supplied to the Service and constructions but in the Youth Fund case, money was simply stolen from bank accounts.
The MPs will summon Chase Bank managers to shed light on the transactions.
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