As Equity Bank sweats over the Sh179 million card fraud in Kenya, its subsidiary in neighboring in Uganda is also in the middle of a mega bank fraud.
A Kenyan banker has been dragged into a UGX65 billion (Approx KES 2.2 billion) Equity Bank heist in Uganda. Mr. Samuel Kirubi who previously served in the bank as a managing director has been summoned to the country as police investigate what is being described as a mega theft.
The police in Uganda on February 15 2024 arraigned 8 senior officials with obtaining money by False Pretences, Money Laundering, and Conspiracy to defraud the lender.
The 8 accused persons include; Musiime Julius, Nabisubi Erina, Tumuhimbise Cresent, Ssemwogerere Fred, Asiimwe Wycliff, Mugumya Robert, Kato Fred and Mukwaya Ronald.
According to a police report seen by Kenya Insights, the charges stem primarily from the fraudulent diversion and disbursement of funds from the bank, in form of unsecured loans to unqualified people. Some of these included relatives, with whom they created fictitious companies and fraudulently disbursed huge amounts of money, that would be picked directly by the staff or indirectly using co-conspirators, proxies or conduits.
“The accused persons depict a brazen effort to siphon monies from the bank, to instead fund personal gains,” part of the police report reads.
Forensic investigations
The police announced that they’re conducting forensic investigations into the fraud and that they are trailing several suspects, including those who resigned, after the massive fraud was detected. The Former Executive Director in Charge of Commercial Banking, Onyango Kenneth, who had just resigned was arrested.
Kenneth Onyango when he was arrested. Photo/courtesy.
According to media sources in Uganda, the arrest of Onyango is being viewed as shedding light on the intricate web of deception within the financial institution.
Mr. Onyango was released however after being detained shortly on the instructions of Uganda’s Director of Public Prosecution (DPP). Kenya Insights has learned that it was a calculated move to buy time and gather enough evidence to nail him.
DPP advised the police to spread wide their net in investigations and go after other people in the ecosystem who likely worked with Onyango as it is impossible for him to have worked alone.
The saga, which began with the abrupt departure of Kenyan Samuel Kirubi, former CEO of Equity Bank Uganda, in 2022, has now ensnared key figures within the organization. Kirubi, who was ordered to leave office amid mounting suspicions, has since been summoned back to Uganda by Equity Group CEO James Mwangi to confront the fallout of his alleged mismanagement.
Sources within the bank reveal a trail of irregularities dating back to Kirubi’s tenure, prompting a thorough examination of financial records spanning several years. “Kirubi is in the country with auditors from Nairobi. He has been directed by the angry Mwangi to clean up his mess. The auditors, who are being taken around by Kirubi himself, are turning all books of accounts pages from 2018 to when Kirubi left. Many people are yet to lose jobs and others, arrested,” offered our inside source.
The recent announcement by Equity Bank acknowledging the potential fraud on their stock loan and agent financing products sent shockwaves through the industry and the public alike. “We hold ourselves to the highest standards of accountability and transparency, and the person (s) found to be responsible, whether through fraud or errors of commission or omission will be fully addressed by the policies, procedures, and ethical values of the organization and, where appropriate, the laws of the country,” read the statement.
Suspected role of Mr. Samuel Kirubi in the bank heist
Media reports in Uganda citing sources close to the investigation reveal that Onyango’s release stems from the inability to pin him down without implicating higher-ups, specifically former Managing Director Samuel Kirubi and his replacement Anthony Kituuka. The scandal, dating back to 2018, inescapably implicates these top executives in a web of deceit and fraud that has rocked the nation.
“Police can never successfully implicate Onyango in the absence of his immediate bosses like former MD Samuel Kirubi and the current boss Anthony Kituuka, given the fact that the investigations are stretched as far back as 2018 when Kirubi was still in charge,” offered the source. Kirubi was relieved of his duties two years ago, and was replaced with Anthony Kituuka.
Mr. Kirubi at a past function.
We’ve learned that Mr. Kirubi was unceremoniously hounded from the office in November 20, 2022 alongside two other bank’s directors in suspected fraud. That the affected officials were attached to the larger credit section of the Bank, echoed a signal on what could have been the matter – hence the current situation.
Media reports in Uganda also allege that Samuel Kirubi and his management connived with a prominent businessman Sudhir Ruparelia and fraudulently sold him two prime properties belonging to another businessman Peter Kamya of Ssimbamannyo.
At the time of his departure, Kirubi and his subordinate `accomplices` had their plight driven via issues to do with bad loans and discrepancies surrounding the same. Intelligence had it that his sacking was partly sparked off by the Country`s regulatory body, Bank of Uganda(BOU) via an audit.
Kirubi had three loans he was supposed to write off as instructed by BOU, before he could handover. This stance, because the same loans had already gone bad under his watch and will.
Reports indicate that the three big loans as that of a prominent but controversial city businessman John Bosco Muwonge, which staggered around UGX47Bn. Muwonge had reportedly bought most of his siblings Godfrey Ssebalamu and Nabukeera`s properties using most of the money from Equity Bank and some from Bank of Africa. The other loans were that of Mogas, whose digits were also in Billions, as well as another of a Matugga-premised Company.
Upon his departure, Kirubi was swiftly replaced by Anthony Kituuka who had previously served as the Executive Director for Regional Subsidiaries from 2014 to 2016.
Hailed as a seasoned banker with the impressive track record above, Kituuka has found himself drowning in the mess left by his predecessor. Despite his credentials, he has struggled but failed to clean up the systemic sleaze that plagues Equity Bank, leaving the institution and its clientele in turmoil. But alas! Kirubi`s mess was too voluminous for him to clean. So much so, he can instead soil himself deeper into it.
Now, we understand that for police to ably charge Onyango, Kirubi and Kituuka must be lined ahead of him as key suspects. For starters, Onyango and five others namely; Julius Musiime, Erina Nabisubi, Fred Ssemwogerere, Wycliff Asiimwe and Crescent Tumuhimbise are accused of messing up with billions of dimes meant for stock loan product. This product is designed to provide vital credit support to businesses of all sizes.
The stock loan product, designed to provide vital credit support to businesses of all sizes, now stands at the center of the investigation. Equity Bank’s commitment to uncovering the truth and holding those responsible to account underscores the gravity of the situation. With both staff and clients implicated in the probe, the bank vows to uphold its standards of transparency and integrity.
The conundrum faced by police, Equity Bank and its proprietor James Mwangi, is that all loans in this category are vetted and approved by the Bank`s five-member Credit Committee. Therefore, the unfolding scandal implicates not only Onyango but also key figures within the bank’s Credit Committee, chaired by the Managing Director. With Kirubi and Kituuka at the helm during the period under investigation, the committee’s complicity in approving dubious loans cannot be overlooked.
Equity Bank CEO James Mwangi.
While Equity Bank seeks to navigate the fallout from this scandal, questions linger over the extent of its impact on both customers and stakeholders. Concerns over accountability and corporate governance loom large as the investigation unfolds, casting a shadow over the institution’s reputation.
Ugandan media have it that before the infamous investigation, Mwangi had successfully sought President Museveni`s attention, threatening to close business in Uganda over frustrations in investigations. Initially, all cases for and against Equity Bank Uganda would die prematurely. Some cases` fate would be influenced in Equity`s favor but leaving huge dents on the Bank`s reputation before public.
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