How the bank lost millions after the cashier passed out

Stanbic Bank branch on Kenyatta Avenue in Nairobi. [Wilberforce Okwiri, Standard]

A customer goes to a bank in Nairobi to deposit 650,000 Shillings. A cashier mistakenly wagers it as Sh6.5 million before passing out. The money will later be withdrawn in Mombasa.

The events sum up the bizarre lawsuits that led to the sacking of a Stanbic bank clerk who was awarded Sh870,738 last week for unfair dismissal.

But there is not a word about the cashier who passed out to start the events that cost the bank Sh5.71 million seven years ago.

The High Court ruled Stanbic was wrong to fire Jenipher Mwende Kiwanza after an accounting error and delayed rectification that left her in the dark.

“What turns out in this case is a classic case of institutional failure for which the plaintiff (Kiwanza) has been blamed simply because she was at the end of a well-choreographed fraud that may have been internally encouraged and that” the managers of the Waiyaki Way branch caught on the wrong foot, ”ruled the court.

On January 15, 2013, Ms. Kiwanza was employed as a cashier in the private and commercial banking department of Stanbic’s Digo Road branch in Mombasa.

However, she was fired on June 30, 2014 after Stanbic failed to exercise caution as a “failure to review a customer’s account history and follow anti-money laundering guidelines”.

The court heard that the events leading up to her release began on May 7, 2014 when a customer deposited $ 650,000 in the bank’s Waiyaki Way branch.

Nelly Njeru, a cashier at the branch, took out Sh6.5 million instead of Sh650,000 to start the series of events that cost the bank.

“In a bizarre turn, Nelly Njeru began to cramp and had to be hospitalized,” the court heard.

On the same day, a Steven Chorio Kiai went to the Digo Road branch in Mombasa and asked for Sh1 million to be withdrawn over the counter. The transaction was completed by Kiwanza.

The following day, the same customer returned to the same branch to withdraw Sh6.16 million.

The customer instructed the bank to convert the money into dollars, then into the equivalent of $ 70,000. His request was granted. He also presented a check for Sh95,000 to deposit into a newly opened savings account.

The bank dismissed Kiwanza on the grounds that it was not exercising due diligence.

But she responded with a lawsuit. She told the court that she relied on the core banking system, which showed that the account was actually $ 6.5 million.

Stanbic’s senior human capital business partner, Sylvester Odhiambo, testified that the core banking system is considered very secure and “the cashiers shouldn’t doubt it”.

So while Kiwanza was right not to doubt the core banking system, Stanbic was wrong when he delayed fixing a mistake made in Nairobi.

Stanbic’s financial crime control manager Joel Kiarie told the court that the mispublication was discovered in the Waiyaki Way branch around 12 noon, but the correction was not made until 5:03 pm.

At this point the funds had already been withdrawn. It is not clear whether the bank carried out follow-up checks on the employees who collapsed in Nairobi and caused the loss.

Mr. Kiarie had told the court that it was the duty of the Waiyaki Way store team leader to make sure everything was in order after the cashier fell ill.

“That clearly did not happen and the entire bank and its branch network were exposed,” the court said.

Ms. Kiwanza told the court that the transactions were approved after a rigorous review by the customer service team leader.

As it turned out, the transactions were being made on an account that did not have the funds to cover them. That cost the cashier her job.

Stanbic could not prove that the transaction should have been authorized by the branch manager or the deputy branch manager.

“I have argued elsewhere that the way they do business requires bankers to be subject to a high standard of care,” said Judge Linnet Ndolo.

“I have to make a caveat, however, that bankers are only people, not angels. It must always be checked whether they have acted sensibly in their function. ”

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