Nakumatt was arguably Kenya's largest money laundering operation. Turns out the supermarket operations were just a very nice cover story:
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Nakumatt’s main money laundering innovation was the use of lawyer’s client accounts as trading accounts.
nation.co.ke/news/Money-lau…
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Nakumatt’s main money laundering innovation was the use of lawyer’s client accounts as trading accounts.
nation.co.ke/news/Money-lau…
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Simply stated, Nakumatt came up with a system whereby money for trading and paying creditors was banked in a lawyer’s client account.
Such accounts enjoy some of the highest legal protections because of the principle of lawyer-client confidentiality.
Simply stated, Nakumatt came up with a system whereby money for trading and paying creditors was banked in a lawyer’s client account.
Such accounts enjoy some of the highest legal protections because of the principle of lawyer-client confidentiality.
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Since the Kenya Revenue Authority does not have powers to place receiving orders on lawyer client account, the billions running through the accounts remained beyond the taxman’s scrutiny.
Since the Kenya Revenue Authority does not have powers to place receiving orders on lawyer client account, the billions running through the accounts remained beyond the taxman’s scrutiny.
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In one case, an account was opened and on the very same day reflected a cash deposit of Sh32 million. In the following days and months, millions were channelled through the account.
In other cases, huge cash payments would be disguised as payments to legitimate suppliers.
In one case, an account was opened and on the very same day reflected a cash deposit of Sh32 million. In the following days and months, millions were channelled through the account.
In other cases, huge cash payments would be disguised as payments to legitimate suppliers.
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Perhaps the most authoritative source linking Nakumatt to money laundering are confidential reports and audits that the Central Bank of Kenya (CBK) conducted in the build-up to the closure of the defunct Charterhouse Bank in 2006.
Perhaps the most authoritative source linking Nakumatt to money laundering are confidential reports and audits that the Central Bank of Kenya (CBK) conducted in the build-up to the closure of the defunct Charterhouse Bank in 2006.
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From these reports, it emerges that Charterhouse was ann integral cog in the veritable nexus of institutions that formed an expansive money laundering machine.
The lender operated like Nakumatt’s in-house bank, with branches situated within the supermarket chain.
From these reports, it emerges that Charterhouse was ann integral cog in the veritable nexus of institutions that formed an expansive money laundering machine.
The lender operated like Nakumatt’s in-house bank, with branches situated within the supermarket chain.
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The business model followed by Nakumatt was based on four main planks: first, sell and receive cash for stock and inventory that you don’t own.
Second, don’t pay the suppliers for extended periods.
The business model followed by Nakumatt was based on four main planks: first, sell and receive cash for stock and inventory that you don’t own.
Second, don’t pay the suppliers for extended periods.
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A confidential independent review and audit commissioned by Nakumatt’s lenders and conducted by KPMG in August 2017 found that the length of the average credit period had moved well beyond the normal period of 30 days to 196 days between 2014 and 2017.
A confidential independent review and audit commissioned by Nakumatt’s lenders and conducted by KPMG in August 2017 found that the length of the average credit period had moved well beyond the normal period of 30 days to 196 days between 2014 and 2017.
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Information gleaned from minutes of a meeting between Nakumatt’s receivers and suppliers held last March reveals that the annual turnover of the Nakumatt Westgate branch alone was at one time a whopping Sh4 billion.
Information gleaned from minutes of a meeting between Nakumatt’s receivers and suppliers held last March reveals that the annual turnover of the Nakumatt Westgate branch alone was at one time a whopping Sh4 billion.
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By issuing the commercial paper, the retail giant raised more billions by pretending that the borrowings were going into expansion while, in reality, it was getting the liquidity to hide its weak and consistently declining working capital position.
By issuing the commercial paper, the retail giant raised more billions by pretending that the borrowings were going into expansion while, in reality, it was getting the liquidity to hide its weak and consistently declining working capital position.
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The fourth plank: conceal accounting records so that any auditor looking at your books has to rely on incomplete records.
The “stroke of genius”: when the house of cards comes tumbling down, walk away free, leaving behind a receiver-manager, bitter suppliers and taxpayers
The fourth plank: conceal accounting records so that any auditor looking at your books has to rely on incomplete records.
The “stroke of genius”: when the house of cards comes tumbling down, walk away free, leaving behind a receiver-manager, bitter suppliers and taxpayers
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As at December 31, 2017 at the time of going into administration Nakumatt had total liabilities of Sh35.8bn broken down as follows:
Owed to Suppliers: Sh18.5bn
Commercial banks: Sh6.9bn
Commercial paper holders: Sh4.8bn
KRA: Sh1.8bn
Staff: Sh1.4bn
As at December 31, 2017 at the time of going into administration Nakumatt had total liabilities of Sh35.8bn broken down as follows:
Owed to Suppliers: Sh18.5bn
Commercial banks: Sh6.9bn
Commercial paper holders: Sh4.8bn
KRA: Sh1.8bn
Staff: Sh1.4bn
