The transaction reeks of a botched money laundering deal. I refer to the investigation by Parliament of a money transfer transaction between the power producer, Lake Turkana Wind Power (LTWP) and Kenya Power and Lighting Company that was flagged by a Standard Chartered Bank branch in Frankfurt as being suspicious.
So far, the information before Parliament is as follows. LTWP wired Sh 785 million into a Central Bank of Kenya account ostensibly to refund Kenya Power for excess payments and on account of the so-called deemed energy charges.
Standard Chartered declined to effect the payment on grounds of scanty details and on inadequate disclosure of the ultimate beneficiary of the millions.
On December 23, 2021,LTWP wrote to Kenya Power informing the company that the wire transfer had been rejected. LTWP also asked Kenya Power to provide it with the name of the appropriate contact person at Central Bank of Kenya.
It also wanted to be provided with the additional banking information that had been demanded by the German Bank. These inquiries were met with procrastination and dithering by government.
Parliament should demand answers to the following questions. If a company wants to pay Kenya Power, why would it wire money to the Central Bank of Kenya? I say so because it is not normal for the Central Bank of Kenya to open accounts for private entities and companies like Kenya Power.
The banker to the government mainly keeps accounts for the national government, the county governments and commercial banks.
As an individual, you can only have a CDS account that allows you to pay for Treasury bills and bonds or receive proceeds from government securities when they have matured.
In any international transaction involving payments between private parties, you are unlikely to see a central bank appearing as a counterparty.
Which begs the question: Why was the money not wired directly to Kenya Power’s bankers? At the end of the day, this episode has taken us through a poignant lesson on the state of cooperation by international financial institutions on the reporting and monitoring of suspicious transactions.
Enough of speculation. What are the issues? In my view, the parliamentary investigation must go beyond this individual transaction and put the searchlight on the bigger picture. The investigation needs to determine why the repayments became necessary in the first place.There is a very strong case for Kenya Power to jack up capacity on risk management. The company needs to introduce strongly […]