StanChart pays DPP Sh100m to avoid NYS fraud suit

StanChart CEO Kariuki Ngari. FILE PHOTO | NMG Standard Chartered Bank Kenya (StanChart) opted to pay the office of the Director of Public Prosecutions (DPP) to save its executives from criminal prosecution for failing to report suspicious transactions in connection with the theft of funds at the National Youth Service (NYS).

Details of the secret agreement with the State prosecutor were disclosed yesterday by its London-based parent company, Standard Chartered Plc, via the London Stock Exchange (LSE) where the multinational lender is listed.

The December deal with the DPP means StanChart’s total penalties in the wake of the NYS scandal have risen to Sh177.5 million after the Central Bank of Kenya (CBK) fined it Sh77.5 million for regulatory breaches.

CBK imposed penalties totalling Sh392.5 million on Standard Chartered Kenya, Equity , Diamond Trust , Co-operative Bank and KCB Group .

The banking regulator said that the banks had failed to report large transactions and to undertake proper due diligence on customers. It also accused them of approving large transactions without proper documents.

The five top commercial banks were to face criminal prosecution for facilitating the NYS scam where the lenders received about Sh3.5 billion believed to have been stolen from the State agency.

Standard Chartered Plc reckons that its local affiliate where it holds a 73.8 percent stake opted for a settlement over prosecution.

“In December 2019, Standard Chartered Bank Kenya (SCBK) agreed a settlement of this matter with the DPP,” the multinational said in disclosures to the London Stock Exchange.

“Under the terms of SCBK’s settlement, the DPP agreed to defer prosecution against both SCBK and any persons affiliated with SCBK and the DPP imposed a penalty of Sh100 million ($964,000) on SCBK.”

Standard Chartered Bank Kenya in December 2018 announced the exit of chief executive Lamin Manjang, who was at the helm when the bank received Sh1.6 billion from the NYS. He was replaced by Kariuki Ngari.

The other banks –KCB, Equity, DTB and Co-op Bank— have not announced the status of their co-operation with the DPP. Plea bargain The DPP, Noordin Haji, had earlier told the Business Daily that he was mulling negotiating a plea bargain with the five banks and their officials in connection with the theft of billions at the NYS.This means officials of the five banks including chief executive officers implicated in failing to follow proper procedures that resulted in aiding the loss of the funds may not go to jail, after all.KCB […]

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