Forex Trader Charged Over Theft of Ksh215 Million, CMA Suspends License

‍In Summary:

• Kenya’s public debt has surged to Ksh11.02 trillion—65.7% of forecasted GDP for January 2025—driven by domestic borrowing. External debt has eased with a stronger shilling, but CS Mbadi warns the borrowing spree remains risky. The government also cut guaranteed debt by Ksh90.6 billion.
  
  
• Auditor General Nancy Gathungu flagged irregular withdrawals of Ksh5.03 billion from the Contingencies Fund in FY June 2024. Billions were disbursed for non-urgent expenses without proper justification.
  
  
• The government will settle all NHIF claims of Ksh10 million and below—covering 91% of contracted healthcare facilities—to ease a Ksh33 billion debt left by NHIF’s closure. Facilities with higher claims will face a 90-day verification process.
  
  
• Stanbic Holdings announced a dividend payout of Ksh20.74 per share for 2024, up from Ksh15.35 in 2023, following a 13% rise in net profit to Ksh13.7 billion. Strong lending volumes, a 27% jump in interest income, and digital transformation boosted its performance.
  
  
• Auditor General Nancy Gathungu uncovered a Ksh5 billion insurance scam involving the National Police and Prisons Services. The insurer failed to settle multiple claims, sparking concerns over contract oversight and potential revenue losses.
  
  
• Eight commercial banks—including Equity, NCBA, and Cooperative—forced the Treasury to settle KQ’s defaulted loan of Ksh19.3 billion in full after the national carrier failed to repay its debt, as part of a broader restructuring effort amid persistent financial challenges and a negative equity position.
  
  
• Former councillors who served from 1963 to 2013 continue to wait for their promised one-off honorarium pension of Ksh2.6 billion. CS John Mbadi explained that the lack of a structured payment formula has delayed allocations despite Senate and Cabinet resolutions calling for a clear legal framework.
  
  
• An online forex trader has been charged with defrauding clients of Ksh215.3 million by diverting funds for his personal use. The Capital Markets Authority has suspended his license for 90 days to curb risks in online forex trading.
  
  

An online forex trader has been charged with defrauding clients of Ksh215.3 million by diverting funds intended for online forex trading for his personal use. According to his charge sheet from the Capital Markets Authority (CMA), between April 2022 and August 2024 he converted Ksh212.16 million and additionally misappropriated Ksh3.14 million from three other parties under false pretenses. The CMA, which has suspended Trade Sense’s licence for 90 days, emphasized that as a licensed money manager he was not allowed to access clients' funds directly—a safeguard implemented to curb the risks inherent in online forex trading as reported by the Business Daily. 

Kenya’s public debt has surged past Ksh11 trillion under the Kenya Kwanza administration, reaching Ksh11.02 trillion—65.7% of the forecasted GDP for January 2025—up from Ksh10.58 trillion in June 2024. The increase is largely driven by domestic borrowing, which now stands at Ksh5.93 trillion (comprising Ksh4.93 trillion in Treasury-bonds, Ksh0.86 trillion in Treasury-bills, and Ksh0.14 trillion in other debt), while external debt has declined from Ksh6.09 trillion to Ksh5.09 trillion, due to a stronger shilling. According to the People Daily, although government experts maintain that the debt position is sustainable, Cabinet Secretary John Mbadi cautioned that the current borrowing spree remains risky and stressed the need to balance domestic and external funding sources. Additionally, the government has reduced its guaranteed debt for key institutions by Ksh90.6 billion.

In a report by the Business Daily, Auditor-General Nancy Gathungu has flagged irregular withdrawals totalling Ksh5.03 billion from the Contingencies Fund during the financial year ended June 2024, noting that funds were disbursed for non-urgent expenses without proper justification. In particular, Ksh3.8 billion was irregularly released to the State Department for Arid and Semi-Arid Lands—funds drawn from December 2023 to June 2024—and additional amounts for public works, crop development, and livestock, totalling Ksh130 million, fell short of the urgency criteria required under the Public Finance Management Act, 2012. Furthermore, disbursements amounting to Ksh1.07 billion from the Ministry of Defence, the State Department for Internal Security and National Administration, and the State Department for Irrigation were not fully audited, raising serious concerns over the Treasury Cabinet Secretary’s judgment in advancing funds from a reserve meant solely for urgent and unforeseen expenditures as prescribed by the Constitution.

In a report by Capital Business, the government will settle all NHIF claims of Ksh10 million and below in full—covering 91% of all contracted healthcare facilities—to ease the burden of a Ksh33 billion debt left when NHIF was wound up in November 2024. Facilities with higher claims will undergo a 90-day verification process before a payment plan is agreed upon. This move is part of the broader Social Health Authority (SHA) initiative aimed at providing universal health coverage, even as an Auditor General report raised concerns that, despite massive public investment, the state does not own or control the SHA system because its intellectual property rights remain with a private consortium.

Stanbic Holdings announced a dividend payout of Ksh20.74 per share for 2024, up from Ksh15.35 in 2023, following a 13% rise in net profit to Ksh13.7 billion. According to the Star, the bank's strong performance was driven by robust lending volumes and a 27% jump in interest income to Ksh48.2 billion, despite a 5% decline in net interest income due to rising interest expenses. CEO Joshua Oigara attributed the improved profitability to digital transformation efforts and strategic investments in asset management and sustainability, including channeling Ksh63 million to small businesses and allocating 5% of the loan book to green financing, ensuring resilient earnings in a volatile market.

Auditor General Nancy Gathungu has uncovered a Ksh5bn insurance scam involving the National Police Service and Kenya Prisons Service. The investigation revealed significant anomalies in the group insurance cover—comprising Group Life Benefits, Work Injury Benefits (WIBA), and Group Personal Accident Cover (GPA)—for 141,961 officers. Despite contractual obligations, the insurer failed to settle 21 death claims totaling Ksh43.5 million, 262 injury claims, and 509 WIBA claims, with payment delays contradicting the stipulated prompt settlement timelines. Gathungu criticized management for not adequately monitoring the contract, raising concerns over value for money and potential revenue losses as reported by the People Daily.

Eight commercial banks, including Equity Bank, NCBA Bank, and Cooperative Bank, forced the Treasury to settle KQ’s defaulted loan of Ksh19.3 billion in full after the national carrier failed to repay its debt, triggering a call-up demand to protect Kenya’s credit rating. The Treasury, which had guaranteed the loans, withdrew the funds on January 3, 2025 as an emergency measure after rejecting a proposal to recover the debt through a 6.5-year bond. According to the Business Daily, the default arose from unpaid letters of credit issued to suppliers and is part of a broader restructuring effort that previously saw some debt converted into equity, yet KQ still faces a negative equity position of Ksh123.6 billion amid persistent financial challenges.

In a report by the People Daily, former councillors who served from 1963 to 2013 will continue to wait for their promised one-off honorarium pension payment of Ksh2.6 billion, as Cabinet Secretary for the National Treasury John Mbadi explained before the Senate. He noted that the National Treasury has yet to allocate funds due to the absence of a structured formula for payment—since most former councillors received varying allowances instead of regular salaries. Despite a Senate resolution and a Cabinet memorandum from April 2023, which proposed allocating Ksh2.3 billion for 11,919 councillors who served less than four continuous terms and Ksh218 million for 328 councillors who served four or more continuous terms, lawmakers and former councillors are calling for a clear legal framework to ensure their dues are paid promptly.