The NSSF did not obtain the greenlight of the National Treasury before committing members’ savings in botched Chase and Imperial banks’ corporate bonds, latest report by the Auditor General Nancy Gathungu shows.
According to the audit, the National Social Security Fund (NSSF) has lost Kes666.9 million in the two bonds through investments made under four fund managers including Old Mutual, Britam, GenAfrica and Stanlib.
While information provided by the fund managers is that both Imperial Bank and Chase Bank were cleared and approved by the Capital Markets Authority as viable investment vehicles, the Auditor General said the approval to invest in the two banks by the Treasury was not availed for audit verification.
The audit says the realization of sum total invested cannot be ascertained effectively putting members’ funds at risk. The NSSF has subsequently made a provision for the full amount invested.
Chase and Imperial banks went under shortly after the issuance of their corporate bonds leading to the loss of billions of shillings in investor funds.
In April this year, Central Bank gave the greenlight for the liquidation of Chase Bank, paving the way for disposal of assets and settlement of liabilities for the lender currently in receivership.
The bank’s former chairman, Mohammed Khan, and six others have since been sued for theft of KES1.1 billion shillings.
At the same time, former members of the board of Imperial Bank are under investigations by the Capital Markets Authority over their failure to offer adequate oversight prior to issuance of a KES2 billion bond in 2015.
Mr Christopher Diaz, one of Imperial Bank board members was, however, absolved of wrong doing as he was newly appointed as an independent and non-executive member when the bond raising was already underway.