A former National Social Security Fund (NSSF) manager and three others have been directed by the High Court to either pay a Sh10 billion fine or serve 26 years in prison after their sentences were upheld.
Francis Zuriels Moturi, formerly an NSSF investment manager, along with three stockbrokers, were convicted in 2022 for defrauding the pension fund of approximately Sh1.2 billion back in 2008.
Despite appealing the initial ruling, Justice Nixon Sifuna refused to overturn the conviction, affirming the correctness of the lower court’s decision. The other individuals involved were David Githaiga, Wilfred Weru, and Isaac Nyamongo, who worked as 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.”
In 2022, the former Chief Magistrate Lawrence Mugambi sentenced the four individuals to 14 years in prison each for their role in the misappropriation of Sh1.2 billion from the NSSF. Mugambi, now a judge, directed Francis Zuriels Moturi to either serve 14 years in prison or pay a fine of Sh2.6 billion. David Githaiga, Wilfred Weru, and Isaac Nyamongo were each fined Sh802 million or faced 12 years in jail.
The brokerage firm, now under liquidation, was ordered to pay Sh4.8 billion, contingent upon the availability of funds from the sale of its assets. Despite their appeal to the High Court, Justice Sifuna upheld the convictions, stating that the prosecution had convincingly demonstrated a conspiracy to commit fraud.
’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 loss of money from the pension fund meant that the intended beneficiaries suffered, according to the judge. Before assuming the role of investment manager, Moturi previously led the department responsible for purchasing shares.
Justice Sifuna highlighted that Moturi had issued 41 memos to the NSSF’s managing trustee, containing inaccurate information about share purchases supposedly made by DSL on behalf of the NSSF, which were never executed.
The judge further noted that Moturi, entrusted with pension funds, failed to fulfill his duty with honesty and diligence as the 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.
