Banking Fraud: Tears, pain of banking with NIC Bank

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I own a business by the name Zizini Dairies which was registered in the year 2014 (copy of registration certificate available).

Zizini’s mandate was to sell and supply pasteurized milk via vending machine and via packet distributorship to Kasarani area and surrounding environs. . Venue of operation Kasarani Hunters Block 247 Kasarani Mwiki Road Nairobi. (Business permit, Kenya Dairy board Licenses, Distributorship Contracts available). 

Around May 2014 I engaged Atlas Kenya Ltd to import for me a brand new milk vending machine from China and took a loan to facilitate its payment. By October 2014 the machine arrived and after setting up and acquiring all licenses, I commenced business. (Business records available). 

In March 2015, we agreed with my wife to sell the business and more so the machine and venture into other businesses. I thus put up my machine for sale and advertised on Social Media including OLX and Facebook. 

On May of 2015 I received a text message and call from a Mr. Tom of No. +254 736 657 765 who informed me that he had seen my advert and was interested in acquiring the machine for use in various projects. After inspection and negotiations, we settled at a purchase fee of Ks.440, 000. (Call records available).  

On 7th May 2015 Tom contacted me and informed me that their board had sat on 6th May 2015 and approved payment for the vending machine and that morning at 8.00 am, his company had already sent their messenger to my bank to deposit a cheque.

The messenger had gone direct to Kenyatta Avenue branch NIC Bank where he allegedly made a direct deposit of the cheque to my account.(copies of deposit slip available). He had earlier requested my Name which I had sent via text. I thought the cheque was a banker’s cheque as per agreement in our negotiations. 

At around 3.00 pm I received a text from the NIC Bank informing me that my account had been credited with Ks. 440,000 which was the agreed value of sale of the machine.

I rushed to Koinange Street ATM and confirmed Book balance as Ks. 440,000(transaction slip available) and since the bank only sends credit alert’s when the money is in my account.

I believed that they had done their due verification process and confirmed authenticity of the cheque and availability of funds from drawer before authorizing crediting of my account. Or why else would they send me a text informing me my account was credited?

On the strength of that, I met up with Hussein/Tom at around four thirty and went to Kasarani and handed over the machine to them.  

2 days later, upon visiting the bank to withdraw cash, I was alerted that my account had been flagged for Suspicious Criminal Activity and funds held.

I was also informed that the account was also debited and no money was forthcoming. I asked them why no one called me to inform me of that but did not get an answer. 

I then asked for a photocopy of cheque bounced and it’s when I realized it was a personal cheque belonging to Mr. Boniface Mbithi of Standard Chartered Bank.

Apparently, the cheque submitted by the purchaser who we later intimated was a con; was a stolen cheque that had been reported stolen by the owner and thus the cheque was held and payments stopped for suspicious criminal activity.

I ended up being a crime suspect and the bank employees of TRM branch really treated me in a humiliating manner while at their banking hall. 

In short I had been conned both the machine and money which is a loss totalling Ks. 440,000 

This made me feel betrayed by the bank I consider my banking partner and a big letdown by them as they were directly responsible for my loss.

Why? Because, they should not have sent a credit alert to my phone telling me my account has been credited and yet that was not the case.

There was no money in my account. I acted upon the bank balance reflecting in my account and a final confirmation SMS alerting me of a credit into my account. On the basis of this communication form my bank, I went ahead to confidently release my asset to a fraud.

I reported the matter to the branch manager Kenyatta Avenue branch and demanded for answers and to date no answers have come. I hereby again demand the following answers as an innocent lay person expecting service but being failed by bank. Why did the bank not perform due diligence upon receipt of cheque to confirm its genuineness or validity before sending a credit alert to my phone?

As until I visited the bank on Saturday 9th May 2015, I did not know the mode of payment used by the alleged payer and it was the banks duty to ensure before availing the money to book balance and sending a credit alert to a customer (upon which I acted on leading to loss/humiliation;) that the drawer exists, has not or has reported loss of the cheque leaf, that the cheque number has been reported stolen as banks have a common fraud/loss reporting center. 

Details of any stolen cheque I assume is forwarded there and any bank employee should visit that database and find out whether a cheque has been stolen/flagged or is clean before crediting a customer’s account and making funds available in their books and even worse sending a credit alert confirming payment into a customer’s account.

I feel the bank acted negligently here as they are custodians of that information which we lay customers do not and cannot know. We entrust that duty to them otherwise then anyone can use my account for money laundering at will if the bank cannot detect fraudulent cheques immediately or in their custody before going ahead to transact and credit a customer’s accounts. 

Another unprecedented negligence by the bank that totally makes me want to sue the bank and as such demand answers for; WHY DID THE BANK DEPOSIT A CHEQUE INTO MY ACCOUNT WITH A WRONG PAYEE NAME? 

As I had mentioned earlier, from the Photostat images of the rejected cheque I noticed the name of payee written on the cheque leaf was Edwin Ndegwa Maina and yet my names are Edwin Ndegwa Maingi. Who is this “Maina” and why did his cheque get credited into my account? Why did the bank teller accept a cheque with the wrong payee and go ahead to credit my account with the money?

The crediting of my account led me to make certain decisions that have led to loss and I hold that loss directly as a result of the banks communication.  It is my belief that a teller is the gate of the bank and they are the ones to conduct basic due diligence or even face value risk management on behalf of bank and customer. They should not and cannot receive a wrongly addressed cheque and further more go ahead to credit a customer’s account with a cheque.

This is the same as crediting a cheque belonging to a Mr. Nyachae Fred to Edwin Ndegwa’s account because in as far as I’m concerned Edwin Ndegwa Maina is another person and is not me and I don’t take it lightly that another person’s money was credited into my account. I am Edwin Ndegwa Maingi. 

What if it is launder money? In this case it has turned out that the cheque is a product of crime…WHY WOULD THE BANK CREDIT AND EVEN SEND ME CREDIT ALERTS OVER A CHEQUE THAT IS NOT ADDRESSED TO ME?

Does the bank know that on the basis of their communication, I have lost Ks.440, 000? The bank should have refused to accept a cheque with wrong payee. That even as a lay man is common sense.

You cannot credit ones account with another person’s cheque. The banks negligence has led to serious loss for me and I demand a refund of the money they have caused me loss with. 

I demand an apology and a refund of the lost money due to their negligence failure to which with the help of Cofek (herein copied); we shall institute a legal recovery process. 

I suspect that the thieves worked in collaboration with the Banks employee who have a knowledge on exactly how long it takes before credit alerts are sent and reversals thereafter.

The employee is also responsible for crediting my account with a fraudulent cheque not even addressed to me knowing very well that credit alerts and balances will reflect on my account for a certain period before reversals and upon this time they shall push hard for release of the item. 

I am  formally registering a claim and by copy of this mail do hereby notify the regulator Central Bank of Kenya, the Consumer Federation of Kenya,  of the suspicious fraud acts by NIC Bank employees defrauding the public.

I also have knowledge of a few other people who have been let down by NIC Bank for failure to practice due diligence and in due time we are going to institute legal action unless an apology and a refund for all losses I have incurred are due.

I have the statements, The Photostat copies of cheque, sale agreements, SMS notifications, the deposit slip and all supporting documents for this matter and I’m not going to let this act of negligence that has forthwith caused me serious losses slide.

This is what I have to state being of sound mind and health. Edwin Ndegwa (BA Econ)Hons,COP



NIC Bank is led by Mr John Gachora who holds a Masters Degree in Electrical Engineering and Computer Science from the Massachusetts Institute of Technology, USA as well as an MBA from The Wharton School, University of Pennsylvania, USA, He joined NIC from Barclays Africa where he had been Managing Director and Head of Corporate & Investment Banking. Prior to this this he held several executive positions at Absa Bank, in South Africa, as well as Bank of America and Credit Suisse First Boston in the United States. He joined NIC Bank in September 2013 as Group Managing Director and was appointed to the Board on 21 August 2013.



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