The High Court has allowed Equity Bank to freeze the accounts of four individuals and five companies accused of receiving part of Sh1.5 billion allegedly diverted from the lender through fraudulent salary-disguised transactions two years ago.
The court capped the frozen bank accounts at a combined Sh303.2 million, against the Sh1.5 billion allegedly stolen using a former manager through diversion of funds from Equity Bank’s salary-processing ledger.
The judge found that Equity had shown a strong case against the defendants, who include a former bank salary-processing manager, businesspeople and company directors, as well as five companies allegedly linked to the diversion.
The court froze the accounts at UBA, Absa, NCBA, Stanbic and Co-operative Bank, and cryptocurrency holdings linked to three defendants: David Machiri Kimani, Owen Karanja Kuguru and Ruth Muthoni Kamau.
Former Equity Bank Manager David Machiri Kimani (left) Businesswoman Ruth Muthoni Kamau and Lesedi Developers founder and managing director Geoffrey Kiragu who is also linked to realtors Bomalink Concepts and Brickways.
Photo credit: Nation Media Group
The dispute concerns Sh1.49 billion allegedly diverted from Equity’s salary-processing general ledger between November 2023 and June 2024.
The bank says its then Manager-Salary Processing, David Machiri Kimani, used authorised access to transfer the money to third-party accounts. Some was later allegedly converted into cryptocurrency.
The court heard that the defendants –Mr Kimani, Mr Kuguru, Ms Kamau, KT Owen Group Limited, Axteron Technologies Ltd, Mac and Gray Trading Ltd, Blue Kenfresh Ltd, Goodmans Fresh Ltd and Muda Ventures Limited- colluded to defraud the bank of the monies. The bank claimed that “those companies were incorporated specifically for that purpose”.
Equity processes salaries for clients using employee details, salary amounts and funds supplied by employers. The bank alleges Mr Kimani fraudulently exploited access to the ledger to make transfers unrelated to genuine salary payments.
The bank told the court that the money was transferred to various accounts belonging to third parties after which, “in a web of fraudulent transactions, the monies or part thereof, was further converted to cryptocurrencies held by some of the defendants”, and part of it was transferred to yet other entities.
The judge cited SWIFT messages identifying Equity’s code, EQBLKENAXXX, as the sending institution and its general ledger as the source. The transfers used Mr Kimani’s assigned computer and user ID.
Equity said the transaction trail and links among recipient companies showed coordination and a risk of dissipation, particularly because cryptocurrency can be transferred quickly. It sought a freeze order and conversion of digital assets into ordinary currency.
Joseph Kimani Machiri.
Photo credit: Photo | Family
Mr Kimani’s father, Joseph Kimani Machiri, filed an affidavit describing himself as his son’s guardian. He denied that Mr Kimani owned cryptocurrency accounts or authorised the transactions, and challenged Equity’s calculations.
Another defendant, Owen Karanja Kuguru, said companies linked to him, Axteron Technologies Ltd and Mac and Gray Trading Ltd, provided trade-finance, import and shipping services.
He said client payments were legitimate and the companies did not know the money allegedly came from Equity. He said the two companies charged five per cent commissions on client engagements.
Ruth Muthoni Kamau, also a defendant and identified as owner of Blue Kenfresh and Goodmans Fresh companies, challenged Equity Bank’s use of confidential banking and personal information in its pursuit of the freeze order. She said the information was obtained unlawfully and breached an earlier court order.
The High Court dismissed her application because her lawyer had sworn the affidavit on contested matters. He said an advocate should not act as both counsel and witness, and described the affidavit as hearsay.
The judge left the legality of the disputed confidential personal information for trial, when Ms Kamau may raise it again. He declined further tracing and accounting orders, saying they would assume liability before the case was heard.
“The plaintiff has demonstrated a right that strongly appears to have been infringed by the defendants so as to call for an explanation or rebuttal,” the judge said. “I am not saying that the plaintiff will obviously succeed at the full trial,” he added.
The court froze accounts belonging to Axteron, KT Owen Group, Mac and Gray Trading, Blue Kenfresh, Goodmans Fresh and Muda Ventures, subject to limits totalling Sh303.2 million. It also froze digital assets held for Mr Kimani, Mr Kuguru and Ms Kamau on Binance or other platforms.
The individual limits are Sh156.2 million for Axteron held at UBA and Absa Bank, Sh30.8 million for KT Owen Group at NCBA account, and Sh14 million for Mac and Gray Trading held at Stanbic and Co-operative Bank accounts.
Blue Kenfresh’s Co-operative Bank account was capped at Sh32.8 million, Goodmans Fresh’s at the same bank at Sh24.2 million, Ms Kamau’s NCBA and Co-operative Bank accounts at Sh36 million, and Muda Ventures’ UBA account at Sh8.7 million.
Identifiable cryptocurrency was also ordered to be converted within 10 days. If the defendants fail to comply, platform operators may identify and convert the holdings.
The court ordered the proceeds to be deposited in a Central Bank-licensed tier-one bank, with CBK appointed as escrow agent. The orders preserve identified assets pending Equity’s recovery suit.
Following the heist, Equity initially dismissed about 195 employees after an internal review found suspicious transactions through staff bank and mobile-money accounts. More than 40 transactions used the manager’s credentials.
