Four people, among them a former National Social Security Fund (NSSF) investment manager and officials of a collapsed stock brokerage firm, have been fined a total of Sh8.4 billion over the loss of Sh1.2 billion at the pensioners’ fund over a decade ago.
Francis Zuriels Moturi, a former investment manager at the NSSF will serve 14 years in jail if he fails to pay a fine of Sh2.4 billion. The amount is twice the money that the NSSF lost between 2004 and 2007.
Former executive director of Discount Securities Ltd (DSL) David Ndirangu, Wilfred Mungoro Weru, a former finance director at DSL, and Isaac Nyakundi, a former investments manager of the collapsed firm, were ordered to pay a total fine of Sh1.2 billion to escape going to prison.
They will equally serve 14 years in jail if they fail to pay the fine.
The court directed the NSSF to recover Sh4.8 billion from the statutory manager of the fund after it was placed under liquidation.
Anti-corruption chief magistrate Lawrence Mugambi said the four conspired to defraud the NSSF through DSL through the purchase of ghost shares.
He said the prosecution proved that the officials acted jointly to defraud the NSSF and each of them aided in the commission of the fraud.“The court cannot lose sight of the fact that enormous pensioners’ funds, which ought to have been safeguarded, were lost through the fraud. The frequency in which the money was released without corresponding shares shows that the fraud was committed in the most uncanny manner,” Mr Mugambi said.
And although the court noted that there was no evidence to show that the four got a cent from the fraud, he ruled that the funds would not have been lost had they chosen to remain forthright.
DSL collapsed under serious liquidity challenges. Its founder, William Githaiga, died while the trial was going on and his son David pleaded with the court for leniency, saying he was taking care of his ageing mother.
The magistrate said Mr Moturi, who defended himself by saying it was not his duty to approve stockbrokers or which companies to invest in, abused his position and trust bestowed on him by the NSSF.
Evidence presented before the court was that NSSF officials wired millions of shillings to DSL for the purchase of shares in several companies, including KCB, Absa, Standard Chartered Bank, Bamburi, KenGen and Nation Media Group at the Nairobi Stock Exchange on behalf of the NSSF.
The court heard that sometime in 2003, the NSSF was converted from a provident fund to a pension fund, and the Board of Trustees resolved to invest in shares, among other investments, to diversify their portfolio.
The managers then sought to invest in the collapsed broker, and in the process lost Sh1.4 billion through the purchase of non-existent shares.
Mr Moturi defended himself saying it was the Board of Trustees’ resolution that dictated the companies to invest in and approved the list of stockbrokers.
The Managing Trustee is the one who orders for shares, executes the cheque and forwards it to the broker, he said.
The court found Mr Moturi guilty of two counts -- conspiracy to defraud and deceiving his employer. He was sentenced to two years for the charge of conspiracy or pay a fine of Sh1 million and a similar fine of Sh1 million for the second count or serve another three years.
The Anti-Corruption and Economic Crimes Act imposes a mandatory fine of twice the amount one benefited from or the loss occasioned and the court directed him to refund Sh2.4 billion or serve nine years in prison.
For the employees of the former brokerage firm, the court found them guilty of fraudulent acquisition of public funds and conspiracy to defraud for which they will each serve three years and two years respectively or pay Sh1 million fines.
Each will be required to pay a fine of Sh876 million or serve additional nine years for occasioning the loss of Sh1.2 billion at the NSSF.
The court said the four should never hold public office for 10 years, in case they pay the fines.
***Updated
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