NAIROBI, Kenya, Feb 1 – The story begins in 2003 when the National Social Security Fund (NSSF) converted from a provident fund to a pension fund.
Following the conversion, the board of trustees resolved to invest in shares in a bid to diversify their investment portfolio.
According to the court proceedings, between August 2004 and July 20, 2007 the NSSF fund managers then invested in Discount Securities Limited through purchase of non-existent shares, losing Sh1.4 billion in the process.
Francis Zuriels Moturi, the former NSSF investment manager together with general manager in charge of finance and investments James Akoya, Mary Ndirangu, the fund’s former internal audit manager, were accused of scheming to steal from the workers’ fund through the purchase of shares.
Others accused include David Ndirangu Githaiga, a former executive director of the defunct Discount Securities Ltd (DSL), its ex-finance director Wilfred Mungoro and Isaac Nyakundi, a former investments manager.
They were charged more than a decade ago with, among other offenses, irregularly trading in shares through DSL, a crime they committed between 2004 and 2007.
According to the evidence presented before the court, NSSF officials wired millions of shillings to DSL for the purchase of shares in several companies, including KCB, Absa, Standard Chartered Bank, Bamburi, KenGen and Nation Media Group at the Nairobi Stock Exchange on behalf of the NSSF.
However, upon checking Nairobi Securities Exchange reference numbers with information from Central Depository and Settlement Corporation, it was discovered that there were discrepancies in the number of shares bought.
After a decade in court, Ex, NSSF Investment Manager Francis Zuriels Moturi, and the three investment brokers, Wilfred Mungoro, David Ndirangu Githaiga, and Isaac Nyakundi were found guilty of the charges.
The chief magistrate Lawrence Mugambi ruled that the prosecution had proved that the four conspired with the collapsed stockbroker to steal the public funds.
“The court cannot lose sight of the fact that enormous pensioners’ funds, which ought to have been safeguarded, were lost through the fraud. The frequency in which the money was released without corresponding shares shows that the fraud was committed in the most uncanny manner,” Mugambi said.
The court, however, acquitted James Akoya and Mary Ndirangu.
Moturi has been sentenced to 14 years in prison or pay a fine of Sh2.6 billion while the three stockbrokers will pay a total fine of Sh2.7 billion for the offense of conspiracy to defraud NSSF.
While delivering his ruling on Monday, Chief Magistrate Lawrence Mugambi issued an order restricting the four from being elected or appointed for public office for the next 10 years.
The court also ordered the collapsed Discount Security Limited to compensate NSSF Sh4.8 billion.
They have been given 14 days to appeal.
NSSF provides social security protection to workers in the formal and informal sectors. The fund registers members, receives their contributions, manages funds of the scheme, processes and ultimately pays out benefits to eligible members or dependents.
In 2020, member contribution at NSSF declined by 2.4 percent from Sh15 .1 billion in 2019 to Kes. Sh14.7 billion in 2020.
Benefits Paid to members decreased by 10.2 percent from Sh4.94 billion paid in 2019 to Sh4.43 billion paid in 2020.
Similar to the previous year, the investment income increased from Sh18.28 billion in 2019 to Sh 20.33 billion in 2020.
A net increase in scheme Funds of Sh14.5 billion was achieved in 2020. The Fund’s net assets, therefore, increased by 14 percent from Sh235 billion in 2019 to Sh250 billion in 2020.