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The national Bank of Kenya (NBK) is struggling with loan debts amounting to more than Ksh47.1 billion, part of which it might be forced to write off for non-recovery. Ksh4.2 billion bailout money from principal owners has also delayed.

At Nairobi Securities Exchange, the share price for the lender has dropped by over 50 per cent, from Ksh9.15 last year to the current Ksh6.

Kahawa Tungu has learnt that 70 per cent of the debts (Ksh32.9 billion) are Non-Performing Loans (NPL’s), which could see the bank collapse.

But what has led to such a huge loss?

Sources within the bank indicate that the loss is craftily being engineered by top management led by the Managing Director and Chief Executive Officer Wilfred Musau in conjunction with the director of corporate banking Reuben Koech and Joseph Kering, the Chair of Board Credit Committee.

In what looked like a recovery plan for the bad loans, the managers introduced ‘incentivized bad debt collection programme’, which would see defaulters receive big discounts.

However, this is a new cash-cow for the three officers, who have allegedly milked the bank dry, and now going for the customers.

Sources within the bank also indicate that not even a single customer has benefited from the plan, and those who have tried to adopt it have lost millions to the officers.

One of those who lost Ksh28 millions as shown in our previous exposé is Ben Gitonga of General Mills East Africa Limited.

Other defaulters, Kahawa Tungu is aware have been able to evade the scheme after landing to a debt pool designed by the managers.

The nefarious managers are fond of asking for a small fee in order to enroll the defaulters to the ‘lucrative’ programme.

Among the defaulters include Chelsea Holdings Ltd (Registered under the number CPR/2011/50972) owned by a Nairobi Tycoon Mr Amin Akberali Manji. Manji was given a
loan by the bank to construct two blocks of Apartments each with 10 large units in Nairobi’s Riverside Drive.

Read: Bad Debt Threatens To Bring Down National Bank

He built 54 serene apartments retailing at Ksh55 million per unit and six duplexes retailing at Ksh95 million per unit.

Following a decelerated uptake in the real estate market, Manji was unable to service his loan.

Musau, Koech and Kering took advantage of the situation and started demanding a unit of duplex each if they were to ensure that half of his loan was written off. Manji did not budge.

A leather tanning company, Zing Investments Company, whose proprietor is
Robert Njoka Muthara, was also a victim of the crafty managers. Muthara was poached from Kenya Commercial Bank (KCB) where he had banked for years. With ‘better’ offers from NBK relationship managers, he opted to shift base.

Unknown to him, NBK had been shunned by International banks due to corrupt practices and this is what would kill his business.

Muthara got a diaspora buyer who insisted on confirmation of a Performance Trade instrument from NBK, the new bank where he was transacting from. Koech lied to Muthara that they will be able to have the instrument confirmed through their correspondent banks knowing very well that National Bank had all its limits cancelled by the correspondent banks and as a result, no confirmation could happen.

Based on this advice, Muthara initiated shipment of leather merchandise to his diaspora buyer because he was also beating time to avoid penalties from the offshore buyer. While the specialized merchandise valued at over US$ 2 million (Ksh200 million) was already on the high seas, the diaspora buyer cancelled the contract citing frustrations from NBK correspondent banks.

Muthara is still licking his wounds following incompetent advice from Koech. He rushed to the courts to prosecute his case. However, NBK hoodwinked him into dropping the case under the promise that they will avail to him additional working capital financing to jump-start the business afresh.

Immediately after he dropped the court case, the bank changed the story and became the subject of attempted extortion.

Koech under Musau and Kering’s instructions approached him and asked him to generate 10 per cent of his outstanding loan (approximately Ksh50 million) if his facility was to qualify for the bank’s Incentivized Debt Collection Program.

Robert Njoka Muthara declined this offer because he did not have the money anyway.

Another victim was Benvar Estates Ltd, a floriculture, horticulture and quarrying company owned by Dr Kennedy Mbugua Thairu.

Read: Female Employee Sues National Bank CEO Wilfred Musau For Sexual Assault

Thairu was ‘poached’ from East African Development Bank in the pretext that they could finance his ambitions at that time. He wanted a loan to buy a large tract of land (in Nanyuki’s Timau area) and also finance the initial operations. National Bank financed the land. Without capital to commence operations, he was doomed to fail and default on the loan, the wish of the three as they would easily swindle him as well as the bank.

The errand boy Koech approached Thairu, demanding three acres for himself and the other two directors (Musau and Kering) so that he could be enrolled to the ‘lucrative’ deal that would see 50 per cent of his loan written off. He declined.

The alleged fraudsters devolved their operations to Nyanza and captured Mzee Peter Bogonko Onchonga’s company Pebo Kenya Ltd, a distributor of Petroleum Products in South Nyanza.

As usual, the bank smuggled the old man from Standard Chattered with a promise to give him timely funds to complete the second phase of his Nyakoe Hotel. This was to be a long and contracted battle but they eventually gave him. However, Mzee Onchonga had already lost out on time and the value for money.

Unable to repay the loan on a timely manner, Koech attempted to recruit him to the Incentivized Debt Collection Program. Just like any other businessman aiming to reduce his cost of business, Onchonga was agreeable to that program until Koech attached an undisclosed amount for kickbacks to the offer.

At that point, Onchonga refused.

These are just but a few cases that the bank has lost billions in the programme, as the officers become richer each day.

Seeing that the lender may collapse at any anytime, Central Bank of Kenya Governor Dr Patrick Njoroge has allowed the bank to re-state its financials and backdate losses in order to hide the rot.

Soon, the bank will be privatized, but it is a ploy to hoodwink the public.

Next we shall be telling you about CBK Governor Patrick Njoroge’s unorthodox plans to privatize mismanaged National Bank and how he has helped the bank float lies when it is collapsing.

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