Jimnah Mbaru fires staff over fraud

Posted on October 1, 2011

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Press Release from Dyer and Blair on Fraud in the company as received by Bizextras…

Jimnah Mbaru, Dyer & Blair Chairman

 

Leading stock brokerage firm, Dyer & Blair Investment Bank want standardised procedures implemented across the financial services sector to reduce fraud which continue to impact on the operations of banks, insurance companies and stock brokers.

The company indicated that by implementing stringent Know-Your-Customer (KYC) procedures as well as a thorough monitoring of processes, the financial sector operators would be better placed to reduce incidences of fraud.

Dyer & Blair Investment Bank Chairman, Mr Jimnah Mbaru who is also a founder member of the Nairobi Stock Exchange (NSE) said this in response to a recent incidences where the firm has been mentioned in relation to fraud involving Kshs 10.9 million.

Mbaru disclosed that upon receiving a complaint from a customer, a Margaret Mukuhi Njuguna alleging the transfer of Kshs 10,933,510.55 from her account without her knowledge, Dyer & Blair immediately instituted an internal investigation, alongside an independent probe by the Capital Market Fraud Investigation Unit (CMFIU).

The firm also went ahead to notify the Banking Fraud Investigations Unit (BFIU) of the irregular transaction.

He further revealed that CMFIU investigators had already uncovered how an imposter, presenting herself to Dyer & Blair as Margaret, had opened an account with Gulf African Bank (number 0120619101) where the money was credited.

“An arrest warrant for the fraudster has already been issued following the placement of the fraud case in court and the police are in hot pursuit of the said. The regulator has also been sufficiently briefed and are still involved under the CMFIU arm in the investigation,” the Chairman noted.

CMFIU has also launched investigations targetting Dyer & Blair employees who came into contact with the dealings of the account.

“Eleven members of staff who came into contact with the account have had their employment services terminated and five among them have been bonded and are under investigation by CMFIU,” he added.

As a long term measure to reduce such incidences, Dyer & Blair has also embarked on a stringent KYC procedure and client account activation process.

More recently, Dyer & Blair was mentioned in two separate media reports. In the first instance, a letter published in the Daily Nation’s Capital Letters column from a customer, Mr Joseph Kimani, highlighted the fraudulent sale of his shares in KCB and EABL worth a total of over KShs 30,000 in March last year.

In the second incident, The Star newspaper reported on a court ruling of a case involving James Mugo, a Dyer & Blair Investment Bank agent in Murang’a who admitted to swindling off Kshs 200,000 from a client, Ms Hellen Wambui.

The Chairman noted that while investigations into the cases had been launched both within the company and at CMFIU, the company was already fully compliant to CMA guidelines and would not hesitate to facilitate compensation to the affected ‘once it is proven beyond resonable doubt that the bonafide client is not in any way involved in the fraud.’

According to the CMA regulations, a professional indemnity insurance cover is critical as a way of cushioning investors in the stock market from loosing their money or investments due to fraudulent activities.

He attributed the massive occurence of such fraud in the banking sector as compared to the capital markets to the stringent processes stockbrokers insist on before money is paid out to the client.

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