KenyanHour

EcoBank Kenya Company Secretary Caroline Mbenge is on the spot over suspicious deals at the bank, which has put the bank at risk of facing sanctions over financial irregularities.

Mbenge has also been accused of misleading the bank by working in cahoots with fraudsters to defraud a major shareholder of the bank’s client/account holder and placing the bank into disrepute.

Mbenge is allegedly engaged in fraudulent deals at the bank leading to the loss of millions of shillings by the financial institution.

According to bank statements in our possession, Mbenge has authorized the illegal withdrawal of millions of shillings belonging to clients and diverting the money to microfinance institutions in fictitious transactions.

The Legal boss is also at the center of a scandal at the bank where she refuses to comply with court orders to award litigants who’ve been awarded by the courts in legal cases against the bank.

However, Mbenge is allegedly complying with other court orders where she has cut deals to receive kickbacks from litigants who’ve won cases against the bank.

Mbenge now risks six months in jail for failing to comply with a High Court directive to release USD 487,047.99 in unpaid salaries and allowances to one of its clients, Monthida Rashi.

The bank is accused of defying a court order issued by Lady Justice J.W.W. Mong’are on December 5, 2024.

The Legal Department boss has further been embroiled in a fresh scandal where a judge received a bribe of Sh200 million to influence a case in court.

The judge has already been transferred in the recent shakeup by Chief Justice Martha Koome.

The High Court directed the bank to release the funds, held in one of its accounts, to Rashi, the fifth plaintiff in a long-standing financial dispute. The amount was intended to settle pending salary arrears and allowances owed to her. Justice Mong’are explicitly ruled:

“The total sum of USD 487,047.99/- be released to the 5th Plaintiff from one of the Interested Party’s Bank Accounts held at EcoBank Kenya Limited to offset her pending salaries and allowances.”

Additionally, the court allowed Rashi, as a valid account signatory, to withdraw up to USD 2,000 per month from the amount, as per a resolution passed on June 25, 2021.

Despite this clear order, the bank has allegedly failed to act, prompting legal threats from the plaintiffs’ lawyer, Wilfred Nyamu. Nyamu criticized EcoBank’s defiance, calling it a blatant disregard for the rule of law.

“The CEO of EcoBank Kenya must comply within 24 hours. We have already written a letter to them,” Nyamu stated.

In a formal notice to EcoBank’s management, the plaintiffs’ legal team demanded immediate compliance:

“We have noted your hesitation to comply with the orders of the court since service of the same.

We are instructed to demand, which we hereby do, that you transfer the money into our client’s account as instructed within twenty-four (24) hours.”

Lawyer George Kithi, representing Kiwipay Limited, whose monies are held within EcoBank Kenya, emphasized the importance of adhering to the court order in a letter addressed to EcoBank.

“Kindly purge the contempt to avoid any adverse action against yourselves,” Kithi reiterated.

The letter warned that failure to comply would result in contempt of court proceedings, potentially leading to imprisonment for EcoBank’s CEO, Caroline Mbenge, Head of Legal, and other senior officials.

The legal battle began in May 2024 when Rashi filed an application through her lawyer, requesting permission to withdraw the funds as compensation for her salary arrears.

The court’s ruling in her favor underscored the urgency of the matter.

EcoBank Kenya has yet to issue an official response to the allegations.

Ecobank Corrupt Dealings with government and other Fraudulent Deals.

Internal Procedural Faults Audit report has recently revealed that between August to November 2022, Ecobank Kenya in its ledgers may have led to the manipulation of transactions and possible fraud. 

Ecobank Kenya’s card operations team did not upload critical transaction files as required, and there was no rigorous control over the chargeback process. 

This led to the erroneous inclusion of KSh 5.6 billion in the Merchant Acquiring General Ledger (GL) and KSh 162,346 in 347 entries were rejected by MasterCard but remained unsettled. 

Ecobank Kenya could not recover chargebacks worth KSh 234,464 and revealed that many chargebacks were not debited to the merchants’ accounts immediately as prescribed.

“There were no properly documented operating procedures and accounting entries for different card products. This led to the lumping up of different entries for different card products into the merchant acquiring GL,” the lender reported.

The review was not conclusive because it did not specify how much money was lost due to these weaknesses.

This was mainly because the General Ledger was not exclusively used to record Merchant acquiring details, but was also used to settle entries of other card products like prepaid cards and ATM transactions. 

“A residual balance of US$2.1 million was left outstanding in GL155000068 unsubstantiated. This balance was a reduction from the initial amount which was approximately US$15 million as of July 2022,” the report explained. 

The Crack Team

Prompted to inquire into these irregularities, Ecobank Kenya constituted a team made up of its internal controllers and operations officers to determine if the outstanding debit included transactions that were not settled.

To achieve this investigation, the team obtained transaction and settlement files.  However, the magnanimity of the data in the ledgers made the process tedious and the team was not entirely sure about the nature of some of the settlements because the transaction files were uploaded months after the movement of cash. 

Eleven entries with KSh 2.1 billion were duplicated. “Due to this omission, it was impossible to determine the amount payable to merchants, the amount receivable from schemes and the service commission receivable from the merchants on these days,” the report said. 

The team recommended that reversals of the erroneous accounting process should be advised by the CFO.

They also requested an independent oversight of the maker-checker process by Ecobank Kenya’s Internal Control Department.

“The taskforce therefore recommends documentation of operating procedures and accounting entries for all the card products as well as the regular training of the card and digital operations team,” Ecobank Kenya said in the report. 

Alleged involvement In Government’s Corruption Scheme.

Kenya is currently paying an extra Ksh. 40 Billion to Ecobank Nigeria and Ecobank Kenya for Line 5 Pipeline tender from Mombasa to Nairobi yet the entities were not part of the original contract as financiers of the project.

Zakhem Int. from Lebanon was awarded the 450Km Pipeline project, that cost Ksh. 48B and was funded by six banks which Ecobank wasn’t among those, with KPC covering 28% of the cost.

Ecobank is likely abetting in corrupt dealings and corruption through money laundering for such kinds of dealings. So, they must be reminded, that the government of the day might just be in power for a season and time will reckon when a no -nonsense government will arise to power and they’ll bite their lips.