Fraudulent cases targeting unsuspecting Absa Bank Kenya customers continue to emerge even as the bank battles a Sh1.5 billion compensation suit against the transport firm New Mega Africa.
In what could compound allegations of data breach and deliberate sabotage of businesses, the bank is at the center of a Sh10 million bank guarantee scandal involving an investor in the oil sector.
The investor later realized that the bank guarantee issued was fake and not binding.
The client had ordered goods worth millions of shillings, only for the bank to disown the guarantee.
The bank, through its Trade and Finance department, sent an email to the investor denying the guarantee.
It explained that the guarantee was not binding.
The guarantee was issued by the Absa Nkrumah Road Branch and the staff who handled the issue was suspended on October 13, 2023.
ABSA Nkrumah Road staff member Joseph Wafubwa was the one suspended over the fake guarantee.
Those being trailed separately by detectives over the matter include senior Nyali Absa branch staff, Nkrumah Road staff and other senior officers in Nairobi.
Some Absa staff are also battling accusations of engaging in money laundering and deals targeting foreign accounts trading in dollars and euros.
The bank’s operations in Mombasa County have been dominated by fraudulent cases perpetrated by both senior and junior officials in respective branches.
The investor who was duped in the Sh10 million guarantee scandal is believed to have parted with cash kickbacks of almost 30 percent of the guarantee amount to the bank’s staff.
A source privy to the development says the scheme has been used against many unsuspecting clients who are promised that they will get away with everything as long as they can raise a 30% upfront fee in cash.
The source said many companies could soon be moving to court.
The 30 percent is often shared between the staff and their seniors in the bank and this has reportedly gone on for long because the bank has always been siding with its staff in efforts to protect its image.
The bank has contracted a Public Relations firm that has allegedly compromised the mainstream business desks to give a blackout to ongoing cases against it and specifically the shocking revelations in form of affidavits as brought forth by New Mega Africa in the Sh1.5 billion compensation suit.
The bank on February 25, 2023 signed a Sh1.25 billion Loan Portfolio Guarantee Facility with the African Guarantee Fund (AGF), to increase credit accessibility for local small businesses, including start-ups.
While the main office in Nairobi has been keen on the Loan Portfolio Guarantee facility, some of its staff have perfected the art of looting from unsuspecting clients.
Absa vs New Mega
New Mega Africa accused the bank of sharing its account details with third parties against its wishes and the banking regulations.
The firm, through its director, accused Corporate Credit Manager Supporting Business Banking Wycliffe Makori of working with other employees to share its details with a Kenya National Highways Authority officer identified as Jared Makori.
Mr Wycliffe Makori, who is now a witness standing for the bank, issued affidavits in efforts to delink himself from the accusations.
His communication with Jared revolved around payments being made by Mombasa cement to Absa on behalf of New Mega Africa.
He admits that his relationship with Jared started during his employment at Eco Bank between the years 2011-2015 when Jared was an engineer at KeNHA at that time in the coast region.
“He was my referral person at KeNHA and would offer background checks on several customers that we would finance for KeNHA related works,” he says in his statement.
“The same relationship progressed in Absa Bank where he would confirm invoices and payments of our mutual customers. When the Plaintiff applied for the first loan, Mr. Abai introduced me to Engineer Makori, whom I coincidentally already knew,” Makori adds.
He says in his statement that Engineer Makori affirmed his commercial interest in New Mega Limited and was the one that facilitated the contract they had with Mombasa Cement.
He observes that Mr. Abai sent the offer letter for the first loan of Ksh 6 million to Engineer Makori to review and approve.
His admission that they were sharing and doing background checks for information on mutual customers can be interpreted to mean the two had shared sensitive information about Abai’s account and New Mega Africa in general.
He adds in statement number 20 that when New Mega Africa defaulted on their facilities, he undertook an independent background check on payments from Mombasa Cement.
“I first called Engineer Makori to inquire whether there was a delay in payments from Mombasa Cement, which he promised to revert to me after checking with them.”
Absa ordered to pay a couple Sh234 million for fraudulent shares sale: On Tuesday, January 10, 2023, the bank was ordered to compensate a couple more than Sh234 million over the fraudulent sale of their shares.
The bank was found guilty of fraudulently selling the couple’s shares in various companies, including East African Breweries Plc (EABL) and BAT Kenya.
This was after a valuation report showed that as per the Nairobi Securities Exchange data, the market value of the couple’s shares by then was Sh231,188,156.
The court also awarded the couple interest and costs of the suit.
In deciding how to value the couple’s shares, Justice Alfred Mabeya said the expectation of the plaintiffs when buying the shares was to benefit from the shares and the goodies, including dividends, bonuses, and interest that accompanied owning shares.
“The value given to shares is not only in the number of shares alone, but the whole intrinsic value carried by that one share. When the plaintiff came to court to seek justice for their shares, they did not only look at recovering the actual number of shares lost but those shares together with all the benefits that had been lost,” said the judge.
The fraudulent sale of the shares was again a scheme orchestrated by senior staff, some of whom are still working at the bank.
Theft of Sh717,111
In what could also escalate suspected collusion between the bank’s staff and third parties, a man accused of stealing Sh717,111 from an Absa Bank account held by Aknotela Limited was charged before Milimani Chief Magistrate’s Court in August 2023.
The withdrawals by Simon Kipngetich Tonui happened on various dates between August 7 and September 15, 2023.
He is facing 12 counts of stealing, contrary to the law, even as Aknotela Limited remains suspicious of the bank’s staff having colluded with Simon.
The charge sheet presented on Monday, August 7, 2023, links Tonui to theft of an Absa Bank Kenya limited visa Business Debit Card valued at Sh460, belonging to one Esther Akoth Kokeyo, alias Akothee.
He is then suspected to have stolen from the bank’s account registered under a company linked to Kokeyo thereafter.
In the charges outlined, in count two, Tonui is accused of stealing Sh264,000 from an Absa Bank account registered under Aknotela Limited by way of withdrawing the amount by ATM within Nairobi on various dates between August 7 and September 13.
Counts three and four allege that the accused, on August 8 and 9, withdrew Sh44,000 and on August 31 he withdrew Sh40,000 from the aforementioned account.
Akothee is also accusing some senior Absa Nyali branch staff, including the branch manager, of colluding with external fraudsters.
Absa disclosed spending Sh1 billion on court settlements in the financial year that ended on December 31, 2022.