NSSF Case Sets Historic Graft Fine Record of Kshs. 9.8bn

01:02:2022: Dogged determination is what it took for the Ethics and Anti-Corruption Commission (EACC) to secure the conviction of fraudsters, setting the stage for historic cash fines of Kshs. 9.8 billion in a case that had been stuck in court for over a decade.

Background

In 2008, the Kenya Anti-Corruption Commission – as it was then known – received a report that the National Social Security Fund (NSSF) had lost Kshs. 1.6 billion of pension funds through irregular trading in shares by Discount Securities Limited. It investigated the matter and subsequently recommended to the Director of Public Prosecution (DPP) the arraignment of:

1. Francis Moturi — NSSF investments manager;
2. James Akoya — NSSF general manager finance;
3. William Murungu — director, Discount Securities;
4. David Githaiga — director, Discount Securities;
5. Wilfred Weru — finance manager, Discount Securities;
6. Isaac Nyamongo — investments manager, Discount Securities; and
7. Orchard Estates Limited and Mary Ndirangu — NSSF Internal Audit Manager

Prosecution

The suspects were arrested in 2010 and charged before the Anti-Corruption Court in Nairobi where they pleaded not guilty. One of them, William Murungu, died  as the case was proceeding. The prosecution called a total of 35 witnesses.

On 1^st March 2019, the court ruled that all the accused persons had a case to answer and put them on their defence.

Conviction

The trial was concluded on 1^st December, 2021 and on 28^th January 2022, Chief Magistrate L. Mugambi found Githaiga, Weru, Nyamongo and Discount Securities guilty of fraudulently acquiring Kshs. 1.2 billion meant for shares paid for by NSSF. The court sentenced them to a fine of  Kshs. 1 million each or in default, three years’ imprisonment. In addition, Githaiga, Weru and Nyamongo were ordered to pay a mandatory fine of Kshs. 800,762,248.27 each and in default to serve nine years in prison. Discount Securities, on the other hand, would pay a mandatory fine of Kshs 4,804,573,489.60.

But the court was not done with them yet. Zuriels, Githaiga, Weru, Nyamongo and Discount Securities were found guilty of conspiracy to defraud NSFF of Kshs. 1.2 Billion and sentenced to pay a fine of Kshs. 1 million or in default, serve two years’ imprisonment each.

Zuriels, the Fund’s investment manager, was further convicted of the offence of Deceiving Principal, contrary to Section 41(2) as read with Section 48 of the ACECA, 2003 (Count 5) and sentenced to pay a fine of Kshs. 1 million and in default to serve three years’ imprisonment. In addition, he was required to pay a mandatory fine of Kshs. 2,402,286,744.80 and in default to serve nine years in prison.

Other orders:

• The sentences to run consecutively if in default of fine.
• Based on section 64 (1) of the ACECA none of the accused shall be appointed or elected in public office for 10 years.
• Discount Securities Limited to pay through the statutory manager subject to availability of funds.

Fine Summary

• Francis Moturi Zuriels, investment manager, NSSF: Kshs. 2,602,286,744.80 or, in default, 14 years’ imprisonment.
• David Githaiga, executive director, Discount Securities:  Kshs. 802,762,248.27, or in default, 14 years’ imprisonment.
• Wilfred Weru, finance manager, Discount Securities: Kshs. 802,762,248.27, or in default 14, years’ imprisonment.
• Isaac Nyamongo, investment manager, Discount Securities: Kshs. 802,762,248.27, or in default, 14 years’ imprisonment.
• Discount Securities: Kshs. 4,806,573,489.60

Total Fines Kshs. 9,817,146,979.21