The High Court has allowed Equity Bank to freeze accounts belonging to four individuals and five companies accused of receiving part of Sh1.5 billion allegedly siphoned from the lender through fraudulent salary-disguised transactions two years ago.
The court capped the frozen assets at a combined Sh303.2 million, against the Sh1.5 billion allegedly stolen with the help of a former bank manager.
The judge found that Equity had established a strong case against the defendants, who include a former salary-processing manager, businesspeople and company directors, as well as five companies allegedly linked to the diversion.
The court froze accounts held at UBA, Absa, NCBA, Stanbic and Co-operative Bank, as well as cryptocurrency holdings linked to three defendants: David Machiri Kimani, Owen Karanja Kuguru and Ruth Muthoni Kamau.
The dispute concerns Sh1.49 billion allegedly diverted from Equity’s salary-processing general ledger between November 2023 and June 2024.
The bank says its then Manager-Salary Processing, Mr Kimani, used his authorised access to transfer the money to third-party accounts, with some of the funds later allegedly converted into cryptocurrency.
Equity told the court that the defendants – Mr Kimani, Mr Kuguru, Ms Kamau, KT Owen Group Limited, Axteron Technologies Ltd, Mac and Gray Trading Ltd, Blue Kenfresh Ltd, Goodmans Fresh Ltd and Muda Ventures Limited – colluded to defraud it.
The bank claimed that ‘those companies were incorporated specifically for that purpose’.
Equity processes salaries for corporate clients using employee details, salary amounts and funds supplied by employers. The bank alleges that Mr Kimani exploited his access to the ledger to initiate transfers unrelated to genuine salary payments.
The money was allegedly channelled through various third-party accounts before being moved to other entities or converted into cryptocurrency held by some of the defendants.
The judge cited SWIFT messages identifying Equity’s code, EQBLKENAXXX, as the sending institution and the bank’s general ledger as the source of the funds. The transfers were made using Mr Kimani’s assigned computer and user ID.
Equity argued that the transaction trail and links among recipient companies pointed to a coordinated scheme and created a risk that the assets could be dissipated, particularly because cryptocurrency can be transferred quickly. It sought orders freezing the assets and converting the digital holdings into ordinary currency.
Mr Kimani’s father, Joseph Kimani Machiri, filed an affidavit describing himself as his son’s guardian. He denied that Mr Kimani owned cryptocurrency accounts or authorised the transactions, and challenged the bank’s calculations.
Mr Kuguru said companies linked to him, Axteron Technologies Ltd and Mac and Gray Trading Ltd, provided trade-finance, import and shipping services.
He maintained that the payments received by the companies were legitimate client transactions and that they were unaware the money allegedly originated from Equity. He said the two companies charged commissions of five percent on client engagements.
Ms Kamau, identified as the owner of Blue Kenfresh and Goodmans Fresh, challenged Equity’s use of confidential banking and personal information in seeking the freeze orders. She argued that the information had been obtained unlawfully in breach of an earlier court order.
The High Court dismissed her application, finding that her lawyer had sworn an affidavit on contested matters.
The judge said an advocate should not act as both counsel and witness, describing the affidavit as hearsay. However, the judge left the legality of the disputed personal and banking information for determination at the full trial, when Ms Kamau may raise the issue again.
He also declined to grant further tracing and accounting orders, saying these would risk assuming liability before the case had been heard.
‘The plaintiff has demonstrated a right that strongly appears to have been infringed by the defendants so as to call for an explanation or rebuttal,’ the judge said. ‘I am not saying that the plaintiff will obviously succeed at the full trial,’ he added.
The court ordered the freezing of accounts belonging to Axteron, KT Owen Group, Mac and Gray Trading, Blue Kenfresh, Goodmans Fresh and Muda Ventures, subject to individual limits that add up to Sh303.2 million. It also froze digital assets held for Mr Kimani, Mr Kuguru and Ms Kamau on Binance or other cryptocurrency platforms.
The individual limits include Sh156.2 million for Axteron accounts at UBA and Absa, Sh30.8 million for KT Owen Group’s NCBA account and Sh14 million for Mac and Gray Trading’s accounts at Stanbic and Co-operative Bank.
Blue Kenfresh’s Co-operative Bank account was capped at Sh32.8 million, while Goodmans Fresh’s account at the same bank was limited to Sh24.2 million. Ms Kamau’s NCBA and Co-operative Bank accounts were capped at Sh36 million, while Muda Ventures’ UBA account was limited to Sh8.7 million.
The court also ordered identifiable cryptocurrency holdings to be converted into ordinary currency within 10 days. If the defendants fail to comply, the relevant platform operators may identify and convert the assets.
The proceeds are to be deposited in a Central Bank-licensed tier-one bank, with the Central Bank of Kenya appointed as escrow agent. The orders are intended to preserve the identified assets pending the determination of Equity’s recovery suit.
Following the alleged fraud, Equity initially dismissed about 195 employees after an internal review identified suspicious transactions through staff bank and mobile-money accounts. More than 40 transactions had been executed using the manager’s credentials.