Chase Bank’s lack of sufficient deposits was the last straw that broke the lender’s back as customers, worried about the bank’s health, went on a withdrawal spree pulling out Sh8 billion in one day. A special audit report by Deloitte released a month after the CBK placed the bank into receivership shows the man at the centre of Sh14.9 billion internal bank heist was to earn $50,466 (Sh5.15 million) a month.
The bank operated two general ledger accounts: CBK Settlement account number 04005459002 worth Sh9, 222,606,805 and Sundry Debtors account number 100004715 worth Sh1, 453,589,511. Although the two accounts worth Sh10.67 billion were initially classified as other assets in Chase Bank’s accounting records, they were later reclassified as loans and advances during the 2016 statutory audit. Chase Bank’s former general manager Makarios Agumbi and his credit counterpart James Mwaura were responsible for initiating and approving transactions posted in the two accounts. The two said Sh7.5 billion was used to buy 12 properties for the bank by related entities and Sh3.1 billion as sums unsupported by documentation.
Irregular loans to entities owned by the bank’s top management have also been unmasked. On December 30, 2015, a day to closing its books for the financial year, the bank disbursed Sh1,023,900,000 to Camelia Investment, Coinbrook Holdings, Cleaopatra Holdings and Golden Azure Investment without adequate documentation or securities. Those loans were not disclosed as insider despite Mwaura indicating that those firms belonged to Khan, the chairman.
Others who benefited directly from those loans include Mohammed Zasrullah Khan and Claude Wagner Khan, brothers of the bank’s chairman. Another Sh3.009 billion to Nine Fifty Limited; Constellation Investment, Anest Africa, Bamburi Rod Partners and Codicote Limited were not disclosed in CBK return for December 2015 despite those entities being linked to bank directors.
Besides illegal loans, Chase Bank’s top leadership perpetuated irregular withdrawals that ran into billions. Sh1.46 billion was withdrawn irregularly from January 1 to April 2016. Most of the payments were made in favor of related entities, construction firms, law firms and two private companies. In another incident, the discrepancy was noted in the bank’s external shilling and dollar-denominated secret account.
The balance on the shilling denominated account in 31st December 2015 showed it at Sh2,290,347,571 but confirmation from Development Bank showed a balance of Sh997,833,517 hence a deficit of Sh1.292 billion.