Possible internal collusion between rogue bank employees and external fraudsters is suspected to have facilitated Sh1.41billion ($10.3 million) heist at I&M Bank Rwanda executed through customer withdrawals in just two months.
According to insiders, the inordinate transactions were neither flagged nor detected raising concerns to management teams in Kenyan, Ugandan and Tanzanian subsidiaries on how the phony dealings went undeterred.
However, recovery probe has already been initiated between the bank and Rwandan authorities.
“Subsequent to year-end, management of I&M Bank (Rwanda) PLC discovered incidents of fraudulent withdrawals through customer wallets amounting to $10.3 million during the period 1 November to 17 January 2023,” said the group in the annual report. As of the date of these financial statements, some recoveries have been made and investigations are still ongoing.” An annual report by I&M Group reads in part.
However, bank insiders fear that in any form of foul play between bank senior managers, their juniors and the web of fraudsters is confirmed, underwriters may fail to compensate for the losses.
Normally, banks insure liquid cash, cash at bank and cash in transit to shield themselves from loss of money.
In effect, the shocking disclosures show the stolen amount is more than the Sh1.04billion net profit that I&M Group recorded from the Rwandan market in the financial year ending December 2022.
According to internal records, the massive heist was executed between November 1, 2022 and January 17, 2023.
I&M Bank entered Rwanda in 2012 through the acquisition of a majority shareholding in Banque Commerciale du Rwanda and holds a 54.47 percent stake through BCR Investment Company.
The stake was worth Sh2.11billion at the end of December.
The Rwandan unit, with more than 65,000 customers served by about 18 branches, 33 ATMs and more than 400 employees, has been I&M ’s most profitable business outside Kenya.
I&M Rwanda closed last year with Sh1.04 billion net profit from Sh1 billion in the previous period while that of Mauritius and Uganda operations returned net profits of Sh644.2 million and Sh288 million respectively.
The Tanzanian unit returned a Sh506.86 million net loss in the period I&M Kenya net earnings grew from Sh7.4 billion to Sh10.2 billion to lift the group’s profitability by 37.7 percent to Sh11.2 billion.