Parliament has summoned Central Bank of Kenya (CBK) governor Kamau Thugge and Capital Markets Authority (CMA) chief executive Wycliffe Shamiah over suspicious bond trade between some brokers and the National Social Security Fund (NSSF).
The Finance and National Planning Committee of the National Assembly wants the two regulators to shed light on alleged impropriety in the bond transactions involving two Central Securities Depository (CSD) accounts of NSSF, those of an individual and a local commercial bank.
Molo MP Kimani Kuria, chairman of the Finance Committee, said claims of NSSF buying bonds at a significantly higher price and selling them at a lower price are weighty and warned that those involved would be held liable if proven.
“We have started by inviting the regulatory institutions to come and tell us what they knew about the questionable transactions,” he said.
The parliamentary investigations into the matter come after CBK detected and alerted CMA of the questionable bond dealings by the NSSF.
At the centre of CBK’s August 19, 2024 letter to Mr Shamiah is the questionable bond transaction through the NSSF CSD accounts and those of Humphrey Wachira Gichuru and Pergamon Investment Bank Ltd.
“The Central Bank of Kenya would like to bring to your attention some irregular trades carried out between May and July 2024 between NSSF Kenya, Humphrey Wachira, and Pergamon Investment Bank Limited,” reads the letter signed by the CBK’s director of financial markets, David Luusa.
According to the letter, the NSSF’s CSD accounts involved in the trade are 114813-0004 and 142816-0004, with Mr Wachira’s CSD accounts 234783-0004 and 265560-0004 and Pergamon bank’s CSD accounts 245351-0004, 207255-0004 and 245221-0004.
“The purpose of this letter is to request the CMA to review the conduct of the above-mentioned parties and share the actions taken with the Central Bank of Kenya,” he said.
According to Mr Luusa, CBK’s analysis of the trades between the parties indicates that NSSF Kenya was buying bonds at significantly higher prices than the market average, “while in some cases, NSSF Kenya sold some bonds at lower prices and bought the same bonds at higher prices in a few days.”
Mr Shamiah was required to contact CBK’s deputy director in charge of debt management for specific transaction details relating to the NSSF’s bond trades but he was not available to explain the steps taken to address the concerns raised by CBK.
