~

~

~

~

~

\

~

.

~-

-

----------i

i

~

;

i

;

'

I

'

-=

:

/

~

Z:

'

:"

-

'

"

-::;-

.

~

:

..

=

.

._~

~

.

.

.

:

~

< .

:

::

.

,

7

,

.

..

7

·

'

''

:

?

!

'

:

~~_

_

U

J

·

1

~

:·

'

~

·

I

f

~

~

_

~

.

..

,

-

:

:

7

,

.

~_

j

>

-

.

0

:

"

,

~

"

--

ll

/

l

1

Vt

Lj

)~'

hr

~

h

«

a

vt

C

D

-

f

h

1

--

tIl

'

)

'?

/

'

< r

.

.

~

2<£/£

(ok

~

yY

7

~

MINISTERIAL STATEMENT ON THE

IN

TER-AGENCY INVESTIGATIONS ON

'

.

-

ECONOMIC

CRIMES

BY CHARTER

HOUSE

BANK LIMITED AND RELATED

COfAPANiES, 27

TH

JUNE, 2006

Mr. Speaker Sir, I beg the indulgence of the house to clarify

certain

matters re

l

ated to Charterhouse Bank, as a result of documents tabled in

the house by a member, and subsequent allegations made.

,

f

The media reports and the different

statements that have been made on

the Charter house Bank, have created the impression that:-

(a)

The charges facing the

Governor

of the Central Bank of Kenya,

D

r

. Andrew Mullei, are as a result of his efforts to bring to a halt

t

a

x

evasion, money launde

r

ing and 'other related offences by

C

h

ar

ter HouseBank Ltd and related companies;~cording[y,

I

w

i

s

h

t

o set the record straight on this very important

national

is

s

ue

~

(b)

Tha

t

th

e go

v

ernment has been reluctant to act on the findings of

t

h

e inve

st

i

gation.

1. On

1

5

"

Decemb

e

r

,

2

004

,

the i

n

t

e

r

-

agency task force investigating

-

=

=

=

-

=

-

ec

o

n

omic cr

imes by

C

h

ar

t

e

r

Ho

u

se

S

ank Ltd

w

rote to the Governor and

in

f

orme

d

hi

m

t

hat

th

e

Cha

rt

er

House

Bank w

a

s

complidt

in money

la

u

nderin

g,

a

betting

tax

e

vas

i

o

n an

d breaches

of

ru

l

es and regulations.

_

_

(b)The in

ve

stigati

ons

,

were concluded on 21

st

February, 2006 and file

,

.

forwarded

to

the

Attorney

-

General

with

recommendation

to

p

r

ose

c

u

te th

e Govern

or on fo

ur

cou

n

ts of abuse of office.

2,

The Go

vern

or r

esponded

o

n 22

nd

Decemb

e

r

, 2004,

advising KACCto seek

the Attor

n

ey-General's

o

pinion with

r

espect

t

o its powers to deal with

such prob

l

ems.

He, howeve

r

,

sai

d h

e

would take up KACC's comments

on matters

relating

to Charte

r

H

ous

e

Bank's compliance

with

the

relevant provisions.

3. KACCand KRA continued with investigations into the matter against the

mentioned

firms

that

had accounts

at Charter

House Bank.

The

(

~

i

n

v

estigat

i

o

n

s

are at different

stages of completion

and appropriate

actions w

il

l

be taken.

I wish to request the house to respect the

con

f

iden

tialit

y

of the investigations in order to protect

the outcomes

from unn

e

cessary interference.

M

r. Speaker, as regards the investigation and prosecution of the Governor,

the

f

a

c

t

s

are

:

-

(a) Investigation

s were

c

ommenced

in June,

2005

at the sole initiative of

C

KACCb

a

sed on inf

ormation

received.

(

c

)

T

he Attorney-

General

approved th

e charging o

f t

he Governor on 22

nd

March,

2006

.

(d

)

T

he

l

et

te

r from the Governor

t

o the Minister for Finance on the

status o

f

Charter

House

Bank inv

estiga

t

i

ons in which he requeste

.

d

with

dr

awa

l of the

license was d

o

n

e o

n

zo"

March; 2006, exactly one

month after KACCinvest

i

gation

fil

e was sent to the Attorney-General

and

ju

st

two days be

f

ore th

e

Attorney General approved our

recommendations to charge the Governor.

Mr. Speaker, Han. Members may wish to note that in April and July 2005,

the Gover

n

or made recommendations for renewal of the Bank's license and

opening of a new branch at Nakumatt Supermarket in Nairobi on

,

grounds

.

that

t

he o

ve

rall financial conditions of the bank was satisfactory and

that the bank was fully compliant with the requirements of the Banking

Act and

th

.

e

Central Bank Prudential ~egu(ations.

,

Base

don t

h

e

c

h

ronology of events, it

i

s clear that:

(i

)

T

h

e ch

arging of Dr. MuUei in court and his subsequent suspension

.

i

s b

a

sed on specific charges, and had absolutely nothing to do with

I

"~

,

his stan

d on the Charter House bank;

(ii)

Dr

.

JA

ullei

d

i

d not act on the recommendations of the inter-agency

task

f

o

r

c

e

t

o

t

a

k

e

a

c

t

ion agai

n

st Charter House Bank for one year

and three

mo

n

t

hs;

(iii)

As

tat

e

as 16

th

J

anuary,

20

0

6, the Gov

er

nor recommended

the

r

en

e

w

al

o

f the Bank's lice

n

se

on

the basi

s t

h

at the institution

has

m

ai

ntain

ed

a sound

f

i

nan

c

ial co

ndition

ov

er

t

he years and is in

compli

ance

wi

th

the

Banki

n

g

A

ct and Centr

a

l

Bank Prudential

Regu Iati on

s"

_

_

_

~

'

_

D

I

•

--

:

-_~

(

i

v)

Dr.

Mu

Ue

i wrote

to the Minister for Finance on the eve of his

be

ing

c

h

arg

ed

i

n

cou

r

t.

(v)

Fo

llc

win

g receip

t

o

f the letter

o

f March

20, 2006 I directed CBKto

s

e

n

d a

t

e

am to

Chart

er

House B

a

n

k to update the status of the

20

0

4

r

e

port as a

t

end of March 2006. This report was completed

and

g

ive

n to the

m

anager

s

of the Charter House Bank on June 21

st

f

o

r

th

e

ir

comments

in

accordance with

existing

procedures.

Wh

i

le aw

aiting the response, which is expected

next week, a

C

l

ea

k

ed

copy

of

the

November

2004

report

was tabled

in

'

Pa

r

l

iam

ent.

This caused unnecessary panic in the banking

'

sector

a

nd

i

n

order to protect the interest of

.

depositors and the bank, I

r

egre

t

ta

bly appro

v

ed the appoi

n

tment of a Statutory Manager for

Charter H

o

u

se Bank on June 22

n

d,

2006.

M

r. Sp

e

a

ker

,

I

trust t

ha

t

me

m

be

rs

of

t

his August House and the publi

c

a

t

'

.

.

la

r

ge are no

w

b

etter informed on th

e

fac

t

s

of this

m

a

t

ter.