State enlists Interpol to dismantle corporate fraud network

Imperial Bank depositors during a protest in Nairobi. The collapse of corporate entities have left SMEs struggling with pending payments. PHOTO | FILE | NATION MEDIA GROUP 

In Summary

• The push to track laundered corporate cash comes in the wake of investigations of the collapse of a one-time dominant retailer Nakumatt and Imperial Bank.
• Preliminary reports have revealed a massive looting of funds by executives.
• The collapse of corporate entities have left SMEs struggling with pending payments for services and goods supplied, leading to job cuts.

By JOHN MUTUA
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The State will share data with international security agencies to help track laundered cash and punish corporate chiefs from private firms, Interior Cabinet Secretary Fred Matiang’i has said.

Dr Matiang’i said looting of funds by heads of retail chains and banks, who in turn invest the money outside the country, was fast becoming the norm.

The net result is that small and medium enterprises (SMEs) that do business with the affected firms end up grappling with cash flow.

The push to track laundered corporate cash comes in the wake of investigations of the collapse of a one-time dominant retailer Nakumatt and Imperial Bank. Preliminary reports have revealed a massive looting of funds by executives.

The collapse of corporate entities have left SMEs struggling with pending payments for services and goods supplied, leading to job cuts with others even shutting down on lack of capital to run operations.

“It is disgraceful that a supermarket chain that has been operating in the country for decades suddenly collapses because some people are moving money out of the country, leaving local suppliers high and dry,” Dr Matiang’i said in reference to Nakumatt’s fall.

“We will invoke all international instruments available to us through Interpol and collaborative agencies from other governments in defence of the interests of our people”.

He added that the corporate sector must fight unethical practices and insist on best practices, saying this is how to boost the government’s efforts to weed out fraud in the industry.

The Directorate of Criminal Investigations is investigating former Nakumatt chief executive, Atul Shah and his family over alleged theft and money laundering over the collapse of the chain that for a long time was the market leader in Kenya with operations in neighbouring countries.

The retailer that was dissolved last month owes more than Sh38 billion, including Sh18 billion to suppliers, Sh4 billion to commercial paper holders and the rest to banks.

Early this month, the Kenya Deposit Insurance Corporation (KDIC) told a court that Abdulmalek Janmohamed, who was the Imperial Bank managing director had eight bank accounts where he stashed Sh3.4 billion, part of teh Sh34 billion stolen from the lender in more than 13 years leading to its collapse.

Janmohamed who died in September 2015 and his associates used 12 companies to open accounts at Imperial Bank into which they deposited the money leading to the loss of Sh34 billion in more than a decade.