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Family Bank in plea bargain over NYS scam

Nancy Gitonga and Anthony Mwangi @PeopleDailyKe

In an unprecedented move, one of the six banks in the spotlight for flouting banking regulations in the Sh1.6 billion National Youth Service (NYS) scam, is expected to plead guilty to money laundering charges on Thursday.

Family Bank— the only one that has faced criminal charges—captured headlines with claims that one of the suspects, Josephine  Kabura, was literally allowed to  ferry loads of cash stashed in sacks from the institution. The bank has already been fined Sh1 million for failing to report large transactions conducted by the NYS suspect.

The bank has now entered into a plea bargain agreement with the Director of Public Prosecutions (DPP) amid several conditions among them to pay Sh64.5 million for its role in the Sh1.6 billion NYS money-laundering case. The other five banks— Standard Chartered, Equity, KCB, Co-operative and Diamond Trust— conduits in the scandal dubbed; NYS 1, were fined Sh392.5 million for their failures.

The move is the first one in the country where a corruption-related charge has been settled through a plea bargain agreement.

In law, plea bargaining means the practice of negotiating an agreement between the prosecution and the defence whereby the defendant pleads guilty to a lesser offence or (in the case of multiple offenses) to one or more of the offenses charged in exchange for more lenient sentencing, recommendations or a specific sentence.

City lawyer, Ahmednasir Abdullahi, said a plea bargain agreement is the best way to go in the current world of settling graft-related cases. He says it is at the discretion of the DPP to decide whether in doing so it will be in the interest of the public good.

“Plea bargaining is quite in order and should be encouraged. The DPP might decide that going through the criminal judicial process might not be of public interest,” said the lawyer. The DPP, Ahmednasir says, has to weigh which of the two, plea bargain or the whole judicial process will achieve the objectives and aspirations of the people.

“If an individual can prove he /she can return the whole amount stolen, the DPP can decide there is no need to go through the whole judicial process and opt for a plea bargaining agreement to settle the case,” Ahmednassir explained.

Yesterday, when the case came up for mention before Milimani chief magistrate Francis Andayi, the DPP through State Counsel Daniel Karuri and Lillian Obuo said  the negotiations to the matter have been concluded and the bank has agreed to plea guilty to the charges it faces and pay the suggested terms in the plea bargaining. 

In the plea agreement filed in court bank through the Head of Security John Muchiri King’ori is expected to plead guilty to six counts of failure to report transactions made by  Kabura.  Andayi allowed King’ori more time to go through the plea agreement to enable him familiarise with details of the bargain plea before December 20.

The bank is accused of failing to report suspicious transactions by the suspects. The bank, the DPP says in one of the charges,  failed to detect Kabura’s transactions, which were operated outside the law which bars account holders to deposit or withdrawn amount exceeding Sh1 million without notifying the bank.

Withdraw money

Shocking revelations of the NYS theft show that suspects rushed to withdraw money in cash immediately their accounts were linked to the mega scam.

Senior bank managers are suspected of complicity by deliberately flouting prudential guidelines.

King’ori through lawyer Waweru Gatonye urged the court to approve the suggested amounts in the plea bargaining agreement so that his client can pay the amounts to put the matter to rest.

The bank had unsuccessfully approached theDPP twice seeking out of court settlement, but on its third attempt, the DPP acceded to the request; and with the latest development it hopes to settle the matter that through the normal judicial process is likely drag occasioning bad publicity.

In court papers, King’ori is expected to plead guilty to six counts of failure to report transactions made by Kabura. It is said the money believed to have come from NYS was siphoned through the bank.

“King’ori is entering into this plea agreement and is pleading guilty freely and voluntarily without promise or behalf of any kind,” reads the plea agreement

According to the documents filed in court, the bank is expected to pay Sh64.5 million as court fine for the six counts and should be dispersed as follows.

Of the amount, Sh24,500,000 million will be deposited into an account of NYS and the balance of Sh40 million shall be deposited as court fine if the court approves the same as per the plea agreement.

“If King’ori fails to comply with the terms and conditions set forth in the plea agreement, the State may fully prosecute the accused on all criminal charges that can be brought against it,” reads part of the agreement. The agreement is dated December 11, 2018 and signed by Secretary, Public Prosecutions Dorcas Oduor.

Kabura is alleged to have opened several accounts at Family bank carrying on business under business name of Reinforce Concrete Technologies limited, Roof and all Trading Ltd and Form Home Builders Ltd.

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