When Kilifi County officials desperately started a last-minute attempt to stop a casual workers’ strike, they inadvertently uncovered how some individuals had infiltrated the devolved unit’s finance management system and pilfered millions.
A last-minute run around to stop a strike by casual workers in October 2016, casual workers’ woes during a strike back on October 10 2016, in Kilifi County revealed how some individuals had infiltrated the Integrated Financial Management Information System (IFMIS) and drained it.
That revelation would trigger audits and an Ethics and Anti-Corruption Commission (EACC) probe that has seen 10 people convicted.
The casual labourers at the water department had downed their tools, demanding their dues.
But as the Integrated Finance Management Information System (IFMIS) liaison officer logged into his account to attempt resolving the payment standoff, he realised that the money was missing.
Testifying before the Malindi Chief Magistrate, the county IFMIS liaison officer, Gabriel Mkare, stated that the multimillion-shilling fraud came to light “when an invoice to pay temporary county employees on strike was rejected by IFMIS due to insufficient funds in the designated account.”
The groundwork for the multimillion-shilling heist was quietly laid months earlier through a series of unauthorised system entries.
On March 10, 2016, a local service order with serial number 1155252 was executed under highly irregular circumstances. The infiltration, however, intensified on April 18, 2016, when purchase orders and further local service orders, including serial numbers 1151251 and 1288217, were generated within the network without any lawful authority.
For months, these electronic vulnerabilities sat like a ticking time bomb inside the county network.
The first clear internal warnings emerged on September 29, 2016.
Strange system transactions
An accountant and a chief officer detected highly unusual network activity and formally approached a health department policymaker to raise the alarm.
They explicitly warned that strange system transactions were bypassing individual departments entirely.
Tragically for the taxpayers of Kilifi, these critical red flags went unheeded. By failing to lock down the system or freeze the suspicious credentials, the administration left the digital vault wide open, setting the stage for a massive three-week siphoning frenzy that would officially begin the very next week.
Between October 3 and 7, 2016, the electronic raid reached its devastating peak as around Sh51 million was siphoned out of the Kilifi County account at the Central Bank of Kenya.
The fraudsters operated with tactical speed, routing the stolen public funds into the commercial bank accounts of six private entities for goods never delivered and services never rendered.
On that single day, Leadership Edge Associates Limited received Sh7,840,910, while Daima One Enterprises was credited with Sh7,230,940.
Simultaneously, Makegra Supplies Limited received Sh7,119,220, Kilingi Investment Company Limited obtained Sh6,700,952, and Zohali Services Limited secured Sh5,390,520.
The beneficiaries wasted no time in moving the cash. That very afternoon, Kilingi Investment director Stephen Mutua Nguzi walked into Consolidated Bank and withdrew Sh550,000 via cheque, returning the next morning on 4 October 2016 to withdraw another Sh250,000.
To evade standard daytime monitoring, the hackers shifted their operations to the cover of darkness.
On 5 October 2016, highly suspicious internet banking transfers were processed at unusually late hours, extending as far out as 10 pm into the night.
The final blow came on 7 October 2016 when a second wave of fraudulent payouts hit the county account.
This final run saw Jahazi Investment Company Limited receive Sh6,102,950, while Daima One Enterprises took an additional Sh4,100,200.
Zohali Services Limited siphoned a further Sh3,840,125, and Makegra Supplies Limited closed out the illicit harvest with Sh3,243,958.
By the time the network went quiet, the county treasury had been completely emptied, leaving nothing but an empty digital trail for the striking workers to discover the following Monday.
On 11 October 2016, the Kilifi County Treasury officially wrote to the Director of Banking Services at the Central Bank of Kenya (CBK), sounding the alarm on the massive fraud and demanding an immediate freeze on the first six flagged payments.
Recognising the gravity of the digital heist, the Central Bank Fraud Unit, the Ethics and Anti-Corruption Commission (EACC), and the DCI Malindi quickly convened an emergency crisis meeting.
Investigators and banking officials worked rapidly to trace the stolen millions before they could be permanently dispersed through commercial bank networks.
The swift intervention yielded an immediate breakthrough. The CBK executed an urgent recall of funds, successfully reversing Sh4,100,200 from the Daima One Enterprise account held at Equity Bank, sending the cash straight back into the Kilifi County account.
Weeks later, on October 31, 2016, CBK issued further instructions to reverse a balance of Sh180,548 from the Kilingi Investment Company Limited account at Consolidated Bank.
However, some funds remained out of reach.
Realising the immense scale of the infiltration, the County Treasury formally wrote to the Office of the Controller of Budget on October 26, 2016, and eventually invited the Auditor-General on November 27, 2016, to conduct a forensic audit.
The legal hammer finally fell at the Malindi Anti-Corruption Court when Chief Magistrate Elizabeth Usui delivered the judgment and final sentencing.
The court entered convictions against 10 individuals and companies for their roles in the Sh51 million heist.
Welcoming the court’s decision, the EACC Chief Executive Officer, Abdi Mohamud Ahmed, stated that the ruling sends a clear message that those who steal public funds will be held personally accountable.
Ethics and Anti-Corruption Commission CEO Abdi Ahmed Mohamud.
Photo credit: Lucy Wanjiru | Nation Media Group
“We welcome the decision by the court as a major milestone in Kenya’s fight against corruption. It demonstrates that those who steal public resources and undermine service delivery will be held personally accountable. EACC will continue to intensify investigations, asset recovery, and support prosecution to safeguard public funds,” said Mr Ahmed.
Because the magistrate ordered all sentences to run consecutively, the convicts face massive cumulative fines or heavy prison terms.
Lucy Wanjugu Kibogo, director of Zohali Services and Jahazi Investment, received the heaviest penalty, ordered to pay cumulative fines of Sh38,288,054 or serve 15 years and 6 months in prison.
Her firms, Zohali and Jahazi, were fined Sh24,461,290 and Sh15,205,900, respectively.
Mary Munyiva Kamau was slapped with a Sh26,026,356 fine or 13 years in jail, while her firm, Makegra Supplies, was fined Sh25,726,356.
Other convicts included Samuel Buku Macharia, fined Sh18,581,820 or 7 years in prison, alongside his firm, Leadership Edge Associates, which was fined Sh18,181,820.
Sarah Wangui Kamau of Daima One Enterprises faces a Sh17,461,880 fine or 5 years and 8 months’ jail time.
Stephen Mutua Nguzi was fined Sh16,301,904 or 7 years in prison, while his firm Kilingi Investment was hit with a Sh15,901,904 fine.
In contrast, the court acquitted 10 county employees after evidence proved their IFMIS credentials had been stolen and used by outsiders during odd hours.
Danson Buya Mungatana was also acquitted as the prosecution failed to link him to the fraudulent transactions.
