A former National Social Security Fund (NSSF) investment manager and three ex-stock brokers who were found guilty of conspiracy to defraud the Fund of Sh1.2 billion have been hit with a Sh2.4 billion fine or 14 years in jail.
Anti-Corruption Court Chief Magistrate Lawrence Mugambi handed Mr Francis Zuriels Moturi (former NSSF investment manager), stock broker Mr David Ndirangu and officials of Discount Securities Ltd (DSL) including Mr Wilfred Mungoro (Finance director) and Isaac Nyakundi the sentence on Monday.
Mr Moturi, 72, was ordered to pay a fine of Sh2.4 billion or face jail while the stock brokers will share the liability, meaning each will pay a fine of Sh800.8 million or serve a sentence of 9 years each. Their company DSL, which has since been liquidated and placed under statutory management, has been ordered to compensate NSSF Sh4.8 billion for the loss suffered by Kenyan pensioners.
Deterrent sentence
Mr Mugambi concurred with state prosecutor Christine Gakobo that a deterrent sentence was necessary to send a clear message to corrupt civil servants who siphon public funds through corrupt dealings.
“Due to pilferage of public funds, members of the public have lost confidence in government institutions,” Mr Mugambi said while handing down the sentence.
The Chief Magistrate also agreed with defence lawyer Assa Nyakundi, representing Mr Moturi, that the court is required to exercise discretion while imposing sentences, but differed saying “Section 48 of the Anti-Corruption and Economics Crimes Act (ACECA) stipulates that penalties are couched in mandatory terms which the court cannot depart from while handing down sentences.”
He ruled that the prosecution proved that the four conspired with the collapsed stockbroker to steal public funds.
They were charged more than a decade ago with among other offences, irregularly trading in shares through DSL, a crime they committed between 2004 and 2007.
Other charges include fraudulent disposal of public property, fraudulently making payment from public revenue, willful failure to comply with the applicable procedures and guidelines relating to procurement of property, fraudulent acquisition of public property, conspiracy to defraud, deceiving principal, stealing by agent and neglect of official duty.
Shares scam
They committed the offences by claiming to have purchased various quantities of shares even though no shares had been purchased. While handing down the sentence, Mr Mugambi said the money that was lost in the shares scam were deductions from workers in various sectors of the economy.
The court heard that sometime in 2003, NSSF was converted from a provident fund to a pension fund, and the Board of Trustees resolved to invest in shares in order to diversify the portfolio. The managers then sought to invest in the collapsed broker, and in the process lost more than Sh1.6 billion.
Evidence presented in court showed that the accused persons would request to be paid specific amounts as per orders from NSSF in respect of the purchases. But upon checking NSE reference numbers with information from the Central Depository and Settlement Corporation, it was discovered that there was no purchase made.
Immediately after the four were sentenced, Mr Nyakundi said the defence will appeal.
Meanwhile the four were taken to prison to commence serving their jail terms.
The court had acquitted Mr James Akoya, a former NSSF general manager in charge of Finance and Investments, and Ms Mary Ndirangu, the agency’s former Internal Audit manager, and Orchard Estates Ltd.
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