East Africa, Kenya Mar 12, 2025 (Issuewire.com) - See herehttps://nation.africa/kenya/business/how-english-point-owner-attempt-to-woo-new-kcb-ceo-over-sh5-2b-loan-flopped-4354150
A major financial scandal has surfaced involving Kenya Commercial Bank (KCB) and KPMG East Africa, raising concerns over fraudulent financial reporting, illegal receivership practices, and systemic failures in financial oversight. Nazir Jinnah, the Director of Pearl Beach Hotels Limited (PBHL), has accused KCB Bank of engaging in accounting fraud amounting to Ksh 69 billion during 2016 and 2017, facilitated through KPMGs audits.
Jinnah has formally written to KPMG East Africa, demanding accountability for their role in misleading shareholders, regulators, and the general public by failing to disclose critical financial information. Despite repeated requests for an explanation and a forensic re-audit, KPMG has failed to respond substantively, prompting Jinnah to escalate the matter to KPMG International Headquarters in the Netherlands, the Nairobi Securities Exchange (NSE), and Kenyan financial regulators.
Fraudulent Reporting and Financial Irregularities
According to a forensic audit commissioned by PBHL, KCB Bank processed transactions totaling Ksh 69 billion, which originated from South Sudan and were transferred across international financial jurisdictions, including the United Kingdom, Canada, Ukraine, Russia, and Panama. These transactions, which should have been flagged under Anti-Money Laundering (AML) laws, were neither disclosed in KCBs official financial statements nor subjected to proper auditing protocols.
Jinnah asserts that KCB falsely reported PBHLs loan accounts, which resulted in an illegal and contested receivershipthat has crippled the operations of the business, affecting employees and stakeholders.
Regulatory Failures and KPMGs Complicity
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As the official auditors of KCB Bank during the relevant years, KPMG East Africa signed off on financial statements that omitted the Ksh 69 billion transactions. Jinnah contends that KPMGs failure to disclose or act on these discrepancies constitutes gross negligence, aiding and abetting fraud, and violations of fiduciary duties.
KPMG has not only failed to fulfill its obligations as an auditing firm but has also demonstrated a blatant disregard for financial integrity, Jinnah said. Their lack of response to direct requests for a re-audit and accountability shows their complicity in this financial malfeasance.
Comparison to International Banking Scandals
This case bears a striking resemblance to the recent TD Bank scandal in the United States, where the institution was fined $3 billion for failing to monitor illicit money laundering activities linked to drug cartels. TD Banks case involved systemic audit failures, which the U.S. government classified as long-term, pervasive, and systemic deficiencies. The implications for KCB Bank and KPMG East Africa could be just as severe, with potential criminal and financial penalties looming over both institutions if investigations confirm the allegations.
Demands for Action
In his letter to KPMG and regulators, Jinnah has outlined several demands:
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A full re-audit of KCB Banks financial records for 2016-2017, supervised by KPMG International.
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Formal acknowledgment of the audit dispute by KPMG East Africa to Nairobi Securities Exchange (NSE) and Kenya Revenue Authority (KRA).
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Regulatory intervention by the Directorate of Criminal Investigations (DCI) and Financial Reporting Centre (FRC) to examine potential money laundering violations.
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Immediate suspension of KCB Banks trading on NSE pending an independent investigation.
The Risk to Kenyas Financial Stability
With Kenyas financial markets under scrutiny, the allegations against KCB Bank and KPMG East Africa could have severe consequences on investor confidence and the credibility of the countrys financial oversight institutions. If left unaddressed, such systemic failures could deter foreign investments and weaken the banking sectors reputation.
Despite multiple requests for comment, KPMG East Africa and KCB Bank have yet to provide any substantial response. This silence further raises suspicions about the depth of the alleged financial misconduct.
Escalation to International Authorities
In light of KPMGs non-responsiveness, Jinnah has taken the matter to KPMG International Headquarters, demanding global oversight. If KPMG fails to act, the issue may be referred to the International Auditing and Assurance Standards Board (IAASB) and the Financial Action Task Force (FATF) for further investigation.
The public and investors deserve transparency, Jinnah emphasized. I will pursue every avenue, including legal action and international regulatory pressure, to ensure that financial institutions are held accountable for their actions.
Whats Next?
The unfolding financial scandal raises broader concerns about corporate governance and financial accountability in Africas banking sector. With investigations looming, the coming weeks will be critical in determining the fate of KCB Bank and KPMG East Africa and their standing in the global financial community.
Source :EnglishPoint Marina
This article was originally published by IssueWire. Read the original article here.