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Last Updated:  Thursday, 27 February, 2003, 14:48 GMT
Kenyan bank scandal spreads
Daniel arap Moi
Euro Bank was in favour under Daniel arap Moi
The collapse of a bank with close links to the previous Kenyan regime is causing a widening political storm.

Euro Bank, a small but ambitious Nairobi bank, was liquidated last week after admitting being insolvent.

Now, the management of the bank have been detained by the police for questioning, and politicians are starting to point to government members and other officials who were involved in the scandal.

The country's attorney general and the heads of the central bank and revenue authority have all been urged to resign, and members of parliament claim more allegations will come out over the next few weeks.

President Mwai Kibaki, who led the opposition National Rainbow Coalition to power in December, has promised to rid Kenya of corruption.

Public money vanishes

Kenya's Anti-Corruption Police Unit are currently investigating Euro Bank's collapse, and have interviewed four top executives.

Their aim is to find out the whereabouts of billions of shillings of savers' money, including a large proportion of public funds.

The National Social Security Fund has lost 256m shillings (2.1m; $3.3m), for example, and the Kenyatta National Hospital 421m.

The biggest casualty is the National Hospital Insurance Fund, which has lost 479m shillings in the collapse, and which has now lost 1.2bn in Kenyan banks since the 1980s.

Big names dragged in

Euro Bank won the trust of so many public institutions because of its close links with the government of Daniel arap Moi, Mr Kibaki's predecessor.

For the same reason, it is now under particularly vehement attack from politicians, who allege that many officials still in place should have blown the whistle.

Both Attorney General Amos Wako and central bank governor Nahashon Nyagah have been criticised for negligence over the affair.

And especially sharply criticised has been John Munge, head of the Kenya Revenue Authority, which collects taxes.

He was a director of Euro Bank, and has worked at another bank that collapsed.

James Magara, a member of parliament, says he will table further documents on corruption relating to Euro Bank in two weeks' time.


SEE ALSO:
Corruption fight boosts Kenya
25 Feb 03 |  Business
Kibaki opens parliament
18 Feb 03 |  Africa
Kenya counts on new aid
13 Feb 03 |  Business
Kenya wins World Bank favour
11 Feb 03 |  Business


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