In a report, Auditor General Nancy Gathungu exposed a potential loss of Sh45 million in a failed deal between the Information Communication Technology Authority (ICTA) and Family Bank.
This money was part of unsecured loans provided to various startups under the digital villages program, also known as Pasha Loans, launched by the Mwai Kibaki government to boost ICT growth through the National Optic Fibre Infrastructure (NOFBI).
Under the agreement, Family Bank was responsible for assessing loan recipients, disbursing funds, and ensuring loan recovery.
However, out of the Sh128 million lent, only Sh82 million was remitted, leaving Sh45 million unaccounted for. Gathungu’s report casts doubt on whether this money will ever be recovered.
The Public Investments Committee on Commercial Affairs and Energy initiated an investigation into the matter, but no report has been provided yet.
The committee accused Family Bank of potential fraud, questioning how such a significant amount could disappear without explanation.
MPs pointed to ICTA’s claim that it was the bank’s responsibility to manage the loans and recover the funds.
Family Bank CEO Rebecca Mbithi admitted that the bank had closed the account and had been unable to recover the money, with ICTA acknowledging this closure.
Meanwhile, a separate case involving former Family Bank Chief Commercial Officer (CCO) Kenneth Kaniu has also drawn attention. Kaniu, who was hired by the bank in 2021, filed a lawsuit seeking Sh717 million after his termination in 2022.
He claims the bank ruined his career by falsely reporting a negative background check to the Central Bank of Kenya (CBK) and the Capital Markets Authority (CMA).
Kaniu argues that the bank’s actions have severely impacted his professional reputation and employment prospects.
Family Bank has also been linked to a Sh24 million mortgage fraud case involving client Deborah Ngugi.
Ngugi had taken loans from the bank to develop residential apartments but was persuaded by a bank officer to guarantee an unrelated LPO financing loan.
The bank allegedly failed to recover funds from this transaction, resulting in the wrongful consolidation of debts into Ngugi’s mortgage account.
The High Court ruled in favor of Ngugi, ordering Family Bank to refund her Sh3 million and other associated costs, totaling over Sh2 million.
These cases raise concerns about Family Bank’s handling of loans and client funds, with several incidents suggesting questionable practices that have led to significant financial losses for both the bank and its clients.
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