How Absa Bank's employee data leak brought down multi-billion business

 

Absa’s credit manager by the name Wycliffe Makori, exposed a client's data to a third party, triggering an array of frustrations and a decline to approve applied loans.

A former Absa Bank senior manager has told the court how the lender's credit manager leaked a client's loan distress to a third party, leading to the collapse of his multi-billion business.

Evans Wekesa was the bank’s Head of Sector Business Banking, where he was charged with sourcing new bank clients while also managing existing ones through a team of bankers working under him.

In the court papers seen by The Standard, Mr Wekesa told Justice Florence Macharia that Absa’s credit manager by the name of Wycliffe Makori exposed New Mega Africa Limited's loan distress to a third party, triggering an array of frustrations and a decline to approve applied loans for the business.

The court papers do not, however, clarify if Makori is still an employee of the bank or has left.

New Mega, through its director David Abai, then sued Absa seeking Sh1.5 billion for data breach and financial sabotage.

In his testimony in court against his former employer, Wekesa said Abai suffered significant loss, including the repossession of 11 brand-new trucks leased to them by Mombasa Cement.

Wekesa told the court that Mr Makori called the Kenya National Highways Authority (KeNHA) Regional Manager Jared Makori and warned him against any financial dealings with Mr Abai.

Abai had held a meeting with Wekesa seeking to restructure his credit facility to enable him to expand his clinker transportation business from Mombasa to Uganda.

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He said that Abai, who was already servicing a Sh72 million loan, requested the extension of his temporary overdraft line for a further 90 days to enable the company to stabilise the business and resolve the deficit.

Wekesa said that after several meetings attended by him, Abai, Makori and Absa’s relationship manager Sphie Omondi, they undertook to approve the restructure within seven days to avert further impact on Mega Limited's business.

According to Mr Wekesa, after ending the meeting, Abai called him within an hour, informing him that Makori had leaked out his financial predicament to KeNHA regional manager Jared Makori and warned him of any financial dealings with Mega Limited.

“The purpose of the call was to warn the authority against any potential financial dealings with New Arica Mega Limited or Abai. Makori further advised Jared to inform all other friends or businesses who would potentially enter into any financial dealings with Abai to exercise extreme caution,” said Wekesa.

He said that as a result of Makori’s leaked information, Absa’s officials started frustrating Abai with credit approvals on the grounds that he was a high-risk customer for being a proxy in the company and recommended he be exited.

Wekesa said he disagreed with the officers of Absa who were opposed to supporting Abai’s request, ostensibly on grounds of an opaque ownership structure and suspicion of the company being a conduit for ‘money laundering and bribery’.

He said the bank refused to write a facility decline letter to Abai despite waiting for seven months, and he watched the business crumble due to the inability to execute existing contracts.

“The most significant one was the repossession of 11 brand-new trucks leased to it by Mombasa Cement,” said Wekesa.

The bank went ahead to register an exclusive legal charge over all its assets, hence not being able to seek a loan facility anywhere else.

He said the actions by Makori were not in good faith, were an utter breach of the data confidentiality principle and were a violation of the data protection laws, which were mainly done with the intention of scaring away New Africa Mega Limited's investors and suppliers.

Wekesa said he summoned Makori to his office, where he confessed that he called five minutes after the said meeting with Abai that morning.

He further confessed that he felt the need to inform Jared the actual truth since Abai was running down the business.

Makori also revealed that it was Jared who informed him that he owned the said business and had incorporated Abai as a proxy owing to the potential conflict of interest as a senior civil servant.

“I do confirm that Makori confessed to having called Jared Makori about five minutes after we met with the Abai that morning, informing him of the financial predicaments of Abai,” said Wekesa.

The former manager told the court he escalated the confession to Absa’s legal department for further investigations and disciplinary actions, but the bank told him upon inquiry that Makori’s action bore no material risk of abuse by third parties, and as such, no further action was recommended.

Wekesa said he was warned against informing Abai or taking disciplinary action against Makori as it would be tantamount to the bank admitting liability.

“As a long-serving banker, I am aware that all banks, including Absa, have trained their staff through internal mechanisms on the legal repercussions and implications of failing to protect their clients with relations of data protection and client confidentiality,” said Wekesa.

According to Wekesa, he convinced Abai to commence a banking relationship with Absa, upon which he was later given various loans amounting to sh72 million on his recommendation.

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Wekesa said he had known Abai from his previous employment at Stanbic Bank, where he was a good customer.

“The Director is also well known to me owing to the extensive relationship that existed between Abai and Stanbic Bank,” said Wekesa.

He said that during his employment at Absa, Abai operated its credit facilities very well to the bank’s satisfaction, which caused the bank to recommend additional credit facilities to him on various dates.

Wekesa said that all, if any, of the financial transactions between Abai and him and Absa’s directors were friendly loans that were settled.

He stated that around the Covid-19 period between January and February 2020, Abai was transporting a lot of clinker from Mombasa to Tororo Cement in Uganda.

He said Tororo Cement contracted Abai and leased him 11 trucks on a lease-to-own basis.

Abai proceeded to write to the bank requesting additional financing to handle the new growth in business.

Wekesa said the loan Abai was requesting was within the collateral provided since it was more than adequate to accommodate the loan he was seeking.

“Around this time when Abai’s business was thriving, it had a bank guarantee line in favour of Premium Energy for Sh5 million. Unfortunately, Abai did not draw down the guarantee since there had been a change in payment period by Tororo Cement,” said Wekesa.

He said the payment period moved from between seven and 14 days to between 45 and 60 days, which Premium Energy was not agreeable to, which compelled Abai to return the guarantee to Absa Bank.

Wekesa confirmed that Absa Bank gave Abai a temporary overdraft line as his company looked for a suitable supplier who would not only take the guarantee on the new terms but also give it an extra limit of Sh5 million to cushion it in the short run.

Later, Premium Energy rescinded its early stand and agreed to extend the extra Sh5 million limit to Mage Limited.

Wekesa said that Premium Energy’s owner then advised Abai to reprocess the guarantee in his favour.

Abai agreed and set up a meeting with Absa and Premium Energy to formalise the agreement.

“On the date of the said meeting, Abai came to Absa’s Nyali Branch office where I was, and we called the Regional Retail Manager, who never answered the call, and thus the meeting did not take off, leaving Abai exposed,” said Wekesa.

Wekesa testified that Abai requested the extension of his temporal overdraft line for a further 90 days to enable Mega Limited to stabilise the business and resolve the deficit.

Out of frustration, Abai wrote to Absa seeking them to consolidate all its facilities into one term loan aligning with the one with the longest remaining repayment period.

Wekesa said he requested Makori to prepare a credit proposal seeking the restructure and submit it for approval and advised Abai to furnish Makori with all the information required, but the same never happened until the bank’s Director of Business Banking read the bank’s officials a riot act.