Central Bank of Kenya to Recover Sh727 Million from Former Bank Manager Jignesh Desai

The Central Bank of Kenya (CBK) has received a green light to recover Sh727 million from former Giro Commercial Bank manager Jignesh Desai over theft and fraudulent sale of Treasury Bonds.

This is after the Appeals Court dismissed a petition by Desai seeking to block CBK from recovering the money lost in a scheme engineered at Giro Commercial Bank.

Desai is alleged to have facilitated the opening of a bank account for a briefcase company dubbed Mpesha Ltd, which was used to siphon and sell fraudulent Treasury Bonds from CBK.

The scheme saw Treasury Bonds worth Sh205 million under CBA Capital and Mumbu Holdings transferred to Mpesha Ltd in 2003 and later shared through a web of transactions.

The scheme was discovered when Mumbu Holdings sought to sell their bonds only to discover that their stock was short. A probe was launched immediately, leading to the arrest of Desai and Ngugi.

In December 2019, High Court Justice George Odunga ordered Desai and his associate Alex Ribero Ngugi to pay back the Sh205 million plus interest accrued over years. 

Desai appealed against the ruling and requested the Court of Appeal to suspend the recovery of the millions pending the determination of the appeal.

But a three-judge bench made up of Justices William Ouko, Aike Makhandia, and Patrick Kiage dismissed the application, stating that it is easy for CBK to return the recovered money should the appeal succeed, citing its position as the banker of the government.

"We find that although the appeal may be arguable, we are not convinced that the same shall be rendered nugatory if the stay order is not granted. The applicant has failed to satisfactorily establish that the harm, apprehended if any, shall be irreparable if the appeal succeeds, given the circumstances of this case," the judges said.

The court heard that Desai and Ngugi did not follow the required procedures in setting up the account for Mpesha Ltd, which did not have a physical address and a Kenya Revenue Authority (KRA) Pin.