EACC Arrests Treasury Officials Over Sh1.57bn PROFIT Programme Fraud

• The Ethics and Anti-Corruption Commission (EACC) has arrested senior National Treasury officials and business owners over an alleged Sh1.57 billion fraud scheme involving funds meant for small-scale farmers.
• Investigations revealed that programme officials allegedly used false documents to account for funds, leading to the diversion of Sh1.57 billion meant for the programme.
• The suspects face charges including unlawful acquisition of public property, abuse of office, money laundering, and uttering false documents.

EACC investigations established that KES 1.569 billion was fraudulently disbursed from the National Treasury Development Account to the PROFIT Programme and subsequently channeled to 23 private entities, 15 business names and eight companies, for goods and services that were never supplied or rendered.

The Ethics and Anti-Corruption Commission (EACC) has made significant strides in uncovering a massive fraud scheme involving the Rural Outreach of Financial Innovations and Technologies (PROFIT) Programme. Implemented by the National Treasury with funding from the International Fund for Agricultural Development (IFAD), the programme aimed to provide affordable financing to small-scale farmers between 2013/2014 and 2023/2024 financial years. However, EACC investigations revealed that programme officials allegedly used false documents to account for funds, leading to the diversion of Sh1.57 billion meant for the programme.

The alleged scheme involved the unauthorized opening of a bank account in the name of the PROFIT Programme at KCB, through which Sh175 million was received and laundered. Investigators also uncovered financial links between programme officials and private entities that received funds, contravening public financial management and accountability requirements.

The EACC's investigation highlights the importance of robust public financial management and accountability mechanisms. The alleged diversion of Sh1.57 billion from the National Treasury Development Account to private entities raises concerns about the lack of oversight and control over programme funds. According to EACC, investigators established that programme officials allegedly used forged documents to account for money, which was then channeled to 23 private entities, 15 business names, and eight companies.

The commission's action is also significant in light of Kenya's anti-corruption laws, including the Anti-Corruption and Economic Crimes Act. The suspects face charges including unlawful acquisition of public property, abuse of office, money laundering, acquisition of proceeds of crime, and uttering false documents.

The EACC's pursuit of the PROFIT Programme scandal sends a strong message about its commitment to safeguarding public resources. The commission has directed 11 additional suspects to present themselves for processing, widening the scope of the investigation beyond National Treasury officials to private businesses allegedly used to receive funds from the programme.

In addition to criminal prosecution, EACC is also pursuing recovery of money and assets allegedly acquired through corruption. This move underscores the need for robust accountability mechanisms in public financial management and highlights the importance of transparency and good governance in preventing such scandals.

Lawyers should watch for potential compliance exposures related to the diversion of public funds, including the obligation to report suspicious transactions and ensure proper accounting practices.

Source: Original reporting via The Star