A bitter battle has erupted between Equity Bank Kenya and its former head of internal audit over loan terms following a high-stakes dismissal tied to a Sh1.5 billion cash loss.
The bank’s attempt to increase loan interest rates for the ex-auditor has been blocked by the High Court, sparking a storm around the handling of internal fraud, employee rights, and alleged retaliation tactics.
The ruling comes amid growing scrutiny over how top banks treat insiders once they fall out of favour in high-profile scandals.
Court Blocks Equity Heist After Auditor Fired Over Sh1.5 Billion Scandal
In a ruling that casts fresh light on internal wrangles at Equity Bank, Justice Agnes Kitiku blocked the lender from changing the interest rates on loans taken by its former Group Chief Internal Auditor, Mr. Bildad Khaemba Fwamba.
Mr. Khaemba had borrowed Sh83 million between 2010 and 2023 while serving in senior positions at Equity. The loans were granted on staff rates—six percent for a mortgage and eight percent for an equity release facility.
After being dismissed on October 9, 2024, over alleged negligence tied to fraudulent Real-Time Gross Settlement (RTGS) transactions worth Sh1.5 billion, Mr. Khaemba received a letter from the bank indicating that his mortgage rate would rise from 6 percent to commercial rates, and the staff loan rate would increase to 13 percent.
But Justice Kitiku slammed the brakes on Equity’s move, ruling that Mr. Khaemba would suffer irreparable harm if the bank raised the rates or repossessed his charged properties. She pointed out that the bank did not claim the former auditor had defaulted on repayments.
“The bank holds the property titles as security, and the claimant continues to repay the loans at agreed terms,” Justice Kitiku ruled. “Mr Khaemba has shown he will suffer irreparable loss if the order is not granted.”
Equity Heist Allegations Tied to Role Confusion and Internal Transfers
Mr. Khaemba, who joined Equity in 2001 when it operated as Equity Building Society, rose through the ranks to become Group Chief Internal Auditor. He claims he was wrongfully terminated and insists the allegations were vague and unsupported by facts.
He argues that when the suspected fraud occurred, he had only been seconded to the Kenyan unit for two months—from February 15 to April 15, 2024—and had no operational control over the salary processing platform at the time.
Instead, he says his role during that period was limited to preparing for a board audit committee meeting held in early March 2024 and other strategy matters. He claims the decision to blame him lacked merit and failed to consider his limited scope during the window in question.
Mr. Khaemba also pointed out that his employment remained under Equity Group Holdings Ltd, where he was answerable to the group director—not directly to Equity Bank Kenya’s operational arm, where the alleged loss occurred.
According to court documents, the dismissal letter accused him of “omissions, commissions, failure, or negligence” but failed to specify which exact actions or decisions led to the breach.
Equity Bank Says Fringe Benefits End with Job Termination
In defending its actions, Equity Bank maintained that the termination followed the law and that Mr Khaemba was no longer eligible for staff loan rates.
The bank said he had been reassigned to serve as director of internal audit for Equity Bank Kenya and was responsible for assessing the bank’s risk and control systems, making him accountable for failures that occurred.
Further, the bank argued that allowing Mr Khaemba to keep rebated interest rates would amount to reinstating employment benefits that should end once the employment relationship is severed.
The lender also told the court that Mr Khaemba had not shown he was unable to service the loans at commercial rates, or that he had experienced hardship as a result of the adjustment.
Still, the judge sided with the former auditor, noting that the potential loss of properties—used as collateral—could have lasting financial damage, especially since he had not defaulted on repayment.
Justice Kitiku’s decision means Equity Bank must maintain the original loan terms until Mr Khaemba’s main case—challenging his dismissal—concludes.
Fallout from Equity Heist Case Still Unfolding
The court’s ruling has put Equity Bank under a harsh spotlight over its handling of internal crises. The institution’s attempts to penalise a former senior staff member without clear evidence of wrongdoing raise questions about how institutions use administrative powers to pressure former employees.
Mr. Khaemba’s fall from a trusted internal auditor to a scapegoated officer shows how quickly loyalty can turn into liability when scandals erupt at the highest levels.
His career with the bank spanned over two decades and included transfers, promotions, and cross-unit assignments—further complicating the question of who should bear responsibility for operational lapses.
The outcome of the main legal case could set a precedent for how banks deal with high-ranking employees implicated in fraud, especially when employment terms are tied to financial products.
