How Stanbic unearthed Shs 7bn bank fraud 

It is an open secret that banks are often cagey about information on fraud within their organisation because such information can damage their reputation and erode the trust of their customers.

In this social media era, however, hardly a week passes without a customer accusing a bank of fraud, something that has increased scrutiny on the sector.

But in an unprecedented move that could improve bank-customer relationship, Stanbic bank management has opened about fraud involving $1.8m [about Shs 7bn] orchestrated by a racket that allegedly includes its staff.

According to available documents within the bank, the fraud was initiated and executed through impersonation of Abdulhakim Hussein, the director of Nile Energy Limited. Hussein is said to be a Kenyan national of Eritrean descent.

FAILED SYSTEM INTRUSION

According to sources, Nile Energy Limited’s account had been dormant for a while, yet it had large sums of money in dollars. The initial attempted fraud on Nile Energy Limited’s account started late last year and involved hackers that sent emails that appeared to be from Hussein, but this failed.

“There was also an attempt to use social engineering techniques to gain access to the account’s credentials through emails but that also failed to intrude the bank’s security system,” said the source.

THE PLOT

After failing to gain access to the bank’s computer system, the perpetrators did not relent and it is at this point that it is alleged they resorted to physical fraud, which could only be executed with the involvement of insider help.

They are said to have created a fake passport of Hussein and identified a person to pose as him. Meanwhile, to authorize the process, several rights of bank employees had to coordinate, including that of the managers, supervisors, and tellers.

Within a week, between January 23 and February 1, they were able to transfer the $1.8m in eight instalments using the bank branches of Freedom City and Garden City. On February 2, Garden City branch security busted the racket after Tefera Okuba, the Eritrean who posed as Hussein, was netted while attempting to transfer more the funds.

JUUKO’S TOUGH STANCE ON FRAUD

According to our sources, Ann Juuko, the Stanbic Bank Chief Executive, is known to keep a close eye on the bank’s daily operations and takes a tough stance on fraud of any form. So, when she was alerted of the fraud by the internal control unit, she straightaway launched an investigation through the bank’s forensics services and security unit.

It was discovered that some of the bank’s staff members had conspired to tamper with Nile Energy Limited’s account. Part of the evidence included CCTV footage as well as login data. With the evidence in hand, Juuko set up a meeting on February 5 to study the evidence.

In this meeting, some investigators wanted the matter handled internally but it became clear the suspects were not in any way going to return the money.

“She [Juuko] told everyone that it doesn’t matter whether she is friends with you, if you are caught in an incident of fraud, she would have you jailed and make sure the keys are lost,” said the source.

PRO-ACTIVE APPROACH

Sources say that during the meeting, Juuko said the bank should come out openly and that this was a chance for the bank to demonstrate that it takes fraud seriously and is committed to protecting its customers and stakeholders.

“It was not a popular opinion, but no one could dispute it since it would show they have a vested interest in the matter,” said a source.

After the meeting, the bank swiftly reported the fraud to police, which arrested the Freedom City and Garden City managers David Ssekitto and Moses Ayesiga from their workstations respectively.

Others bank officials arrested also included tellers Geoffrey Nsabagasan, Ritah Komukama and Phiona Nankya. Meanwhile, police also later apprehended directors of companies where the money was transferred. These include Brian Natukunda, a sales executive of Kalimjee Energy, and directors of Famane Investment Company Ltd, Oman Ghebreyesus, Elijah Daniel Wanzu and Dede Fiona Bwende.

THE CHARGES

On February 13, the suspects were arraigned at the Anti-Corruption court in Kololo and charged with causing financial loss, money laundering and conspiracy to commit a felony. They were remanded to prison.

In a statement released on February 13, Stanbic Bank Uganda acknowledged the arrest of the suspects, with the help of the police.

“The suspects have since been produced before the Anti-Corruption court and charged with “causing financial loss and money laundering. Stanbic bank also clarifies that there was no “intrusion into the bank’s systems” as alleged by some media reports,” read part of the statement.

RECOVERED FUNDS

Meanwhile, The Observer has learnt that about $250,000 has already been recovered and that the bank is engaging Hussein to have all his funds returned to the account.

editor@observer.ug