This week saw the naming of Kenyan banks alleged to have received funds from the National Youth Service in an unfortunate sleigh of hand as suspects were also charged in courts over fraud and abuse of office at the NYS.
— 👠 S! (@swambi) May 31, 2018
The list of banks includes virtually all the top banks in Kenya – KCB, Equity, Cooperative, Barclays, CFC-Stanbic, Diamond Trust, National and smaller ones such as Consolidated and SACCO’s such as Unaitas. These are all institutions that offer supplier financing/ LPO financing – a popular product sought by young entrepreneurs and companies that allows them to obtain financing to procure and supply goods, under contract, that are then paid for by reputable companies and government agencies, such as the NYS, directly to the banks to recover the amounts advanced.
Public Notice pic.twitter.com/pqc5CIoDHM
— Co-op Bank Kenya (@Coopbankenya) May 31, 2018
At this stage it is not clear the depth of the suppliers’ relationship with the institutions, as the banks have all cited customer confidentiality and compliance with the law, but it is doubtful if any will have the peculiar banking arrangements seem in the earlier NYS scandal which resulted in fines and sanctions by the Central Bank and charges filed against senior staff of Family Bank.
The article states that banks had filed statutory reports with the Financial Reporting Centre (FRC) a government institution created with the principal objective being to assist in the identification of the proceeds of crime and the combating of money laundering. The problems are clearly NYS ones, not ones and if any contracts were fraudulent, the fraud is with NYS, not the banks.