Court OKs Sh10b fine for NSSF ex-manager, 3 others for fraud

A former National Social Security Fund (NSSF) manager and three others have been ordered to pay a Sh10 billion fine or serve 26 years in prison after the High Court upheld the sentences.

Francis Zuriels Moturi, a former NSSF investment manager, and three stockbrokers were convicted in 2022 of defrauding the pension fund of some Sh 1.2 billion in 2008, but appealed the ruling.

Justice Nixon Sifuna declined to overturn the conviction, maintaining that the lower court had made the correct decision.

The other three were David Githaiga, Wilfred Weru and Isaac Nyamongo, who were stockbrokers at Discount Securities Limited (DSL).

‘Serious fraud’

Justice Sifuna noted that it was clear that the four misappropriated public funds with impunity.

“It is clear from what the court heard that the accused perpetuated serious fraud on [the] pensions of Kenyan workers in cahoots with directors of Discount Security Limited,” he noted.

He continued: “They need to learn painfully to respect public funds and restrain themselves from using and misappropriating the same.”

The four were jailed for 14 years each in 2022 by former Chief Magistrate Lawrence Mugambi for orchestrating the loss of Sh1.2 billion belonging to the NSSF.

Mugambi, now a judge, ordered Moturi to serve 14 years in prison or pay a fine of Sh2.6 billion, while Githaiga, Weru and Nyamongo were each fined Sh802 million or serve 12 years in jail.

The brokerage firm, now in liquidation, was ordered to pay Sh4.8 billion, depending on the availability of funds from the sale of its assets.

Unhappy with the ruling, the four appealed to the High Court. But Justice Sifuna observed that prosecutors had proved beyond a reasonable doubt that there was a conspiracy to defraud.

’Ingeniously conceived’

“What happened at NSSF was premeditated, ingeniously conceived and cunningly executed fraud on [the] public funds of pensioners,” said Justice Sifuna.

“I find there was enough evidence to sustain the conviction. They were all properly convicted. The appeal on conviction and sentence fails.”

The pension fund, he said, had led to the loss of money meant the intended beneficiaries.

Before becoming investment manager, Moturi served as the head of the department responsible for purchasing shares.

Justice Sifuna noted that Moturi issued 41 memos to the NSSF’s managing trustee containing inaccurate statements about share purchases allegedly made by DSL on behalf of the NSSF that were never made.

The judge observed that Moturi had been entrusted with pension funds but failed in his duty to honestly and diligently uphold the rules of his office as investment manager at the NSSF.

“Moturi, being the fund’s investment manager, was expected to act diligently, prudently, and honestly as well as further the interest of the fund, his employer,” the judge said.

He said Moturi had failed in his duties and instead opted to work with outsiders to defraud the same organisation that had trusted him to hold the key docket.

“This he didn’t. He instead in conspiracy with stock brokers participated in a scheme and defrauded the fund of such a monumental sum of money, thereby throwing NSSF and Kenyan pensioners under the bus,” Sifuna stated.

Worked with outsiders

The judge said Moturi’s criminal responsibility arises from the demonstrated and glaring complexity in the scheme and the fact that he was the fund’s investments manager.

“He is the one who promoted the said scheme. He bears the highest responsibility,” the judge added. 

“It’s disgusting that with his complicity, no action and willfulness, the fund continued to periodically make payments for shares that never were.” 

He said the fund’s official failed in his mandate to protect public funds, especially those belonging to vulnerable groups like pensioners.