How former Equity Bank employee allegedly stole over Sh380 million in a month
According to Equity Bank, the dismissed employee made the fraudulent transfers between May 17, 2024 and June 14, 2024.
What started as routine transactions for eight companies turned into a legal nightmare after Equity Bank flagged suspicious fund transfers amounting to Sh386.5 million.
A former employee is accused of orchestrating the fraud, prompting the bank to seek a court order freezing the funds.
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Court filings detailed how the ex-employee allegedly siphoned the funds through unauthorised cash transfers to eight companies between May and June 2024. The affected firms include Ubahashi Traders Limited, Calabash Adventures Limited, Jahnur Investment, Kariye Investment, Flowerish International, Kariye Salah Ali, Hotho Investments, and Sasa Pay Trust.
According to Equity Bank, the dismissed employee made the fraudulent transfers between May 17, 2024 and June 14, 2024.
Upon discovering the fraud, the bank reported the matter to the Banking Fraud Investigation Unit of the Directorate of Criminal Investigations (DCI) and sought a court order to freeze the accounts as investigations commenced.
In its court application, Equity Bank requested the freezing of the following amounts held in the accounts of the companies: Ubahashi Traders Limited (Sh207,720,020), Kariye Investment Limited (Sh85,740,300), Calabash Adventures Limited (Sh32,000), Flowerish International Limited (Sh11 million), Kariye Salah Ali (Sh6 million), Hotho Investments Limited (Sh93.04 million), and Jahnur Investments Limited (Sh18.5 million).
The bank added that Sasa Pay Trust had initially requested them to hold a lien over Sh26.5 million, but records showed that Sh88 million had been transferred to the company.
The companies opposed the application, defending their transactions and asserting their innocence. In affidavits sworn by Mohammed Hashi Adan, Kariye Salah Ali, Mohamud Mohamed Arab, Abdirashid Mohammed Hassan, and Mohammed Sahil, the companies said they primarily operated in the import business and often collaborated to source US dollars.
They claimed to have been approached by Geoffrey Kiragu, who identified himself as a property agent with large sums of money requiring conversion to US dollars. The companies said they agreed to receive the funds in their accounts, convert them and remit the amounts to Geoffrey in exchange for a commission.
Unfairly targeted
However, they later learned that the money had been stolen from Equity Bank. The companies maintained that they were unaware of the fraudulent origins of the funds and insisted they were being unfairly targeted.
They further argued that the money had passed through multiple entities before reaching their accounts, distancing themselves from direct involvement.
The firms also informed the court that they had cooperated with authorities, assisting in the arrest of Geoffrey, and urged the court to lift the freeze on their accounts to allow their businesses to continue operating.
Equity Bank, on the other hand, insisted on maintaining the freezing orders, arguing that the companies had refused to return the Sh386,500,320 despite being aware of its fraudulent origins. The bank also pointed out that the companies were not licensed to engage in foreign exchange transactions, as required by the Central Bank of Kenya, and warned that the funds could be lost if not secured.
High Court Judge Alfred Mabeya ruled in favour of Equity Bank, noting that the companies did not deny receiving the funds from Geoffrey. He cited the doctrine of tracing, which allows the identification of unlawfully obtained money, even if it has passed through multiple hands before reaching its final destination.
"In the present case, at a prima facie level, the record demonstrates that the plaintiff's funds were successfully traced to the defendants' accounts. This, combined with the defendant's admission of receiving the money, establishes an arguable case," Justice Mabeya said.
Addressing concerns over potential dissipation of funds, the judge added: "Regarding the risk of dissipation of funds, there is no assurance that the defendants will refrain from withdrawing or depleting the funds once the freezing orders are lifted. Money is a fluid commodity that can disappear by the stroke of a pen. The court finds that the plaintiff faces a significant risk of losing the money if the orders sought are not granted."
With the court ruling in Equity Bank's favour, the affected companies now face an uncertain financial future as investigations continue.
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