Ex-NBK Boss Summoned by Parliament Over Sh7.7M Moi University Fee Scandal.
Parliament has summoned former National Bank of Kenya (NBK) Managing Director, Wilfred Musau, following revelations of a fraudulent collusion between NBK staff and Moi University officials that led to the misappropriation of KSh7.7 million in student fees.
The National Assembly’s Public Investment Committee on Education and Governance is seeking clarification from Musau on why cheques meant for student tuition were wrongly deposited into the Moi University staff welfare account and later withdrawn.
This fraud occurred between May 30, 2018, and December 31, 2018.
The committee learned that an officer from Moi University’s accounts department had been arrested, charged, and later released on a KSh2 million bail.
However, NBK only subjected the two bank tellers involved in accepting the cheques into the wrong account to internal disciplinary action.
The main suspect in the case had since absconded bail and was at large, with a warrant issued for his arrest. The case was eventually withdrawn under Section 87(A) of the Criminal Procedure Code.
Refund and Legal Threats
NBK refunded Moi University KSh7,727,190 on March 5, 2020, after the university demanded reimbursement and threatened legal action.
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Moi University Vice Chancellor, Isaac Kosgey, revealed that the university formally notified NBK of the stolen funds on February 5, 2020, prompting the bank to refund the money to avoid litigation.
“We want to apportion responsibility as to why fraudulent bank and the university officials are still at large and have not been charged with the theft of Sh7.7 million of student fees.”
The current NBK Managing Director, George Odhiambo, was unable to provide detailed answers, as he was not in office during the fraud. This prompted the committee to summon Musau for further explanation, aiming to assign accountability.
Jack Wamboka, chair of the committee, emphasized the need to hold both bank and university officials responsible, questioning why no charges had been brought against those involved in the theft.
Odhiambo explained to MPs that the fraud was orchestrated by a university staff member, who was arrested with the bank’s assistance. However, Prof. Kosgey disputed this, arguing that NBK had a duty to safeguard the institution’s funds.
Losses and Liability
Odhiambo confirmed that NBK bore responsibility for the loss and, in a move to maintain its business relationship with Moi University, reimbursed the entire amount on May 5, 2020. He reiterated that the bank accepted liability for the stolen KSh7,727,190.
According to Prof. Kosgey, Moi University discovered the fraud after noticing a significant amount of unaccounted-for cheques.
The university reported the issue to the Banking Fraud Unit and provided details of the 65 fraudulent cheques. Additionally, five university staff members were implicated and reported to investigative agencies.
Kosgey expressed dissatisfaction with NBK’s initial response, noting that the bank had proposed sharing the loss with the university, a suggestion the university rejected.
Auditor-General’s Report
Auditor-General Nancy Gathungu highlighted the irregular banking of student fees into the welfare account during her audit of Moi University’s books for the financial years 2018/19 to 2020/21.
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Her review of bank statements and financial records revealed that cheques amounting to KSh7,727,190, intended for Moi University’s Nairobi campus, had been improperly deposited into the staff welfare account instead of the university’s official account.
This discrepancy contributed to the exclusion of the amount from the university’s reported cash balance of KSh920 million.
Ex-NBK Boss Summoned by Parliament Over Sh7.7M Moi University Fee Scandal
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