How Sh21million KISIP II donor money was ‘stolen’ from Equity Bank, Nyamira
Donor-funded development projects in Kenya continue to bleed millions through a sophisticated web of bureaucratic manipulation, inflated procurement, and collusion between government officials and financial institutions.
Investigations reveal a recurring pattern, once funds are disbursed into designated project accounts often held in commercial banks, project coordinators and senior county or ministry officials quietly alter signatories, authorise questionable withdrawals, or redirect money to non-project expenditures.
Procurement fraud remains one of the most common entry points. Tenders are either routinely awarded to shell companies linked to officials or their proxies, with contractors paid upfront for work that is either poorly executed or never begins. Donors’ strict reporting requirements are often met with forged progress documents, doctored audit trails, and manipulated site inspection reports.
Insiders are also said to exploit weak oversight. Internal auditors are frequently sidelined or transferred, while external audits are delayed long enough for money trails to fade. Some banks have been accused directly or indirectly of enabling suspicious transactions by failing to flag irregular withdrawals or rapid large transfers from project accounts.
By the time discrepancies trigger donor inquiries, most funds have been siphoned, leaving stalled infrastructure, ghost projects, and communities with nothing to show. Despite periodic crackdowns, the architecture of graft remains pervasive and resilient.
The latest in such schemes is a fresh scandal in which senior Nyamira county officials under Governor Amos Nyaribo’s led administration are accused of illegally diverting Sh21.2 million from the Kenya Informal Settlement Improvement Project (KISIP) II project account domiciled at Equity Bank, Nyamira Branch.
The funds, The Informer Media Group has established, were part of a Sh235million donor-supported conditional grant meant for informal settlement upgrades were allegedly withdrawn and spent on non-project activities in violation of guidelines.
Preliminary investigations show that in a clandestine manner, county officials and KISIP II Nyamira County Project Coordinator who are signatories to the project bank account domiciled at Equity Bank, Nyamira branch withdrew the monies and channeled them towards non-project-based activities contrary to the guidelines without being detected.
The Ministry of Lands, Housing and Urban Development has since halted the second Kenya Informal Settlement Improvement Project (KISIP II) in Nyamira County following alleged embezzlement of funds held in its account at Equity Bank, Nyamira Branch.
However, upon realising suspicious transactions, in a protest letter to Equity Bank management headed by Group Managing Director James Mwangi, Charles Hinga, Principal Secretary, State Department of Housing and Urban Development directed immediate suspension of further projects works and temporary freezing of the bank account.
Hinga told the bank of the ministerial decision through a letter referenced Ref: MLPWHUD/HUD/KISIP2/1/1/VOL.IV (194) dated October 21, 2025 and was received by Equity Bank on October 31, 2025.
The suspected misappropriated taxpayers’ funds were held at account number 0520*****9409 domiciled at Equity Bank, Nyamira Branch.
“We wish to confirm that Account Number 0520*****9409 held at our Nyamira Branch was frozen on November 1, 2025 and all transactions thereon have been suspended pending further instructions from your office,” Equity Bank (Kenya) Limited acting Managing Director Moses Nyabanda said through a letter addressed to Hinga dated November 20, 2025 and copied to Alice Wahome, Cabinet Secretary, Lands, Public Works, Housing and Urban Development.
The said account transaction irregularities are suspected to have resulted from an internally orchestrated fraud.
“…we have initiated an internal investigation into the operations of the said account to ascertain the circumstances surrounding the reported irregularities… We reaffirm our commitment to uphold the highest standards of integrity, transparency and accountability in the management of all project and public sector funds entrusted to the bank,” Nyabanda’s letter to Hinga adds in part.
However, Hinga’s office has invited the Ethics and Anti-Corruption Commission (EACC) to probe the matter.
When contacted for comment on the remedial measures his administration has made towards the recovery of the said monies, Nyamira governor did not respond to queries sent to him via phone and mail.
“The account signatories will usually be the Chief Officer Finance or their designate, Chief Officer in charge of Housing, and the County Project Coordinator. While we have names of the current signatories, we cannot state for a fact that they were the same signatories over the period that these transactions occurred due to the frequent changes of personnel. We expect this to form part of the investigation report,”
We have since established that the investigations will be widened further to probe Equity Bank officials suspected to have colluded with the Nyamira county officials in withdrawing the project money.
However, when contacted, Equity Bank boss James Mwangi did not respond to our inquiries by the time of going to press.
“We have written to the county to suspending the use of the conditional grant (project funds) until corrective actions are taken. These include change of the then bank account signatories, refund of all diverted funds and appointing a dedicated internal auditor and strengthening the internal audit function. We have also asked the EACC to investigate the transactions and provide a report and actions taken if any,” Orwa added.
Orwa added that the cumulative amount of funds diverted from the project account to pay for non-project related activities was Sh21,222,432.50.
