Kenyan police have arrested 77 Chinese nationals on suspicion of running a cybercrime centre from homes in an upmarket area of the capital, Nairobi.

Officers believe the gang had been preparing to hack the country’s communication systems.

The Daily Nation newspaper said equipment capable of infiltrating bank accounts, Kenya’s M-Pesa mobile banking system and cash machines were discovered after a series of raids. “The suspects are being interrogated to establish their mission in the country and what they wanted to do with the communication gadgets. They have been charged in court,” said the director of Kenya’s criminal investigation department, Ndegwa Muhoro.

“We want to do a thorough investigation over the matter and we are currently working on their travel documents,” added police spokeswoman Zipporah Mboroki. Police said many of those detained appear to have been in the country illegally.

A detective close to the case said the raids were triggered by a police investigation into a house fire in which one person died. The source said the charges levelled against the 77 include “being in the country illegally and operating radio equipment” without the necessary permits.

According to the national Standard newspaper, the Chinese nationals were living in military-style dormitories.

Kenya’s foreign minister, Amina Mohamed, “made it clear that the Chinese government should fully cooperate on this matter”, the communications minister, Fred Matiang’i, said. “China promised to send investigators to work with ours on this matter.” China’s ambassador to Kenya has been summoned to explain if his government was aware of the group’s activities.

The Standard said preliminary investigations had revealed that the group was making microchips for ATM cards, and that it also “ran a command centre whose activities are yet to be established”.

The homes were reportedly in the northern Nairobi suburb of Runda, close to Gigiri, an area that is home to the UN headquarters, US embassy and other political organisations.

The affair is a rare sign of tension with China, a major investor in Kenya’s infrastructure and communications networks. President Uhuru Kenyatta previously described the country as “an honourable partner” for east Africa’s largest economy.