Connect with us
Loading...

Politics

Deep seated rot at Stima Sacco unearthed – Weekly Citizen

Published

on


Trouble is looming at Stima Sacco Society Limited ahead of the annual general meeting to be held in Mombasa.

At the centre of the storm are powerful, untouchable directors who call shots and influence the daily running of activities.

Topping the list is Osman Khatolwa the Sacco secretary and John Mudany. Stima Sacco has over 110,000 members. Already, members who are from energy and ex-energy industry but form the minority are accused of controlling the daily running of events.

The energy and ex-energy hold positions on board and supervision committee at the expense of the powerful bloc of 85,000 outside members who have no representation. Concern has been that the s0-called real members are using by-laws in Stima Sacco constitution to lock and block outsiders.

Mudany

The key player in the scheme is Khatolwa, who using his popularity at Kenya Power Company where he works as a weigh leave officer, junior position by all means, has been able to influence events behind, scenes.

That Stima directors are linked to energy sector is no secret. The board has Joyce Ochieng, Anne Owuor, Albert Mugo, Josslyn Mutua, Beatrice Meso, Florence Obura, Rebecca Miano, Ken Tarus, Mudany and Khatolwa.

Supervisory committee consists of Joseph Masibo, Sammy Ndungu and Abu Swaleh. Weekly Citizen has information that whereas Miano, the current CEO of Kengen is good in running the blue chip company, at Stima Sacco, she has fallen prey to Khatolwa-led cartel.

That Khatolwa who has employed a private firm to undertake his official duties at Kenya Power Kitengela office is out to control events was manifested when he blocked acting Kenya Power MD Jared Otieno from assuming the chair of the Sacco on grounds that Energy CS Charles Keter had told him that Otieno will not be confirmed in the position.

To complicate matters, the directors without involving delegates pushed for membership in Kenya Mortgage Refinance Company that led to Khatolwa being appointed a director to show how powerful he is.

Khatolwa was at one time linked to dubious purchase of Mumias Sugar farmers’ shares that saw locals bay for his blood. Weekly Citizen is in possession of a half year 2019 supervisory committee report that reveals all is not well at the Sacco Ltd.

Of great concern is the report’s exposure of the Sacco’s expenditure on sitting allowance. The report reveals, directors emoluments have been on the increase with growing disparities between allowances paid to individuals board members regardless of the number of committees involved. The report reveals, contrary to sitting allowances paid when attending board meetings, training both local and international, representing the Sacco at official events, branch visits and attending a subcommittee meeting, a section on the board are paid allowances to sign cheques for members, with Khatolwa and Mudany being the culprits.

Miano

In 2018, the directors were paid millions in allowances: Khatolwa Sh5 million, Joyce Ochieng Sh3.2 million, Mudany Sh3.1 million, Ann Owuor Sh2.5 million, Albert Mugo Sh2.4 million.

Josslyn Mutua was paid Sh2.1 million and Beatrice Meso Sh1.5 million for nine months service. Surprisingly, Rebecca Miano served for the same nine months but received Sh928,000 without any explanation to the variation. Ken Tarus was in for nine months but got Sh730,000 while Florence Obura three month service saw her earn Sh929,000 in allowances.

Joseph Masibo in supervisory committee pocketed a cool Sh2.2 million in allowances for 12 months with another Sammy Ndung’u getting Sh2.1 million. Abu Swaleh the link of Khatolwa on supervisory committee sat for nine months but was rewarded with Sh1.3 million in allowances.

As a result, the report recommends empowerment of branch leadership to stop board members frequent travel to branches, signing of cheques and should not be an expensive affair for the society in terms of allowance, clear definition of events which allowances should be paid besides meetings and events.

It is imperative to note that the supervisory committee was reconstituted following an election at the special general meeting held on July 12 2019 that saw election of new members to the committee. To avoid any doubt, the supervisory committee requested the invitation of ministry, county official to conduct and oversee reconstitution. At the function, Sacco CEO performed the duties of returning officer in an election done by secret ballot.

The new faces are Sammy Ndugu (chairman), Masibo (member) and Stephen Vikaru (secretary).

Mugo

The supervisory committee report has uncovered deep seated rot at the Stima Sacco carried out through a raft of loopholes at the troubled Sacco.

Half year financial report indicates that over 60pc of all the credit products fell short of the budgeted interest income.

Notably, the performance of conventional loans including emergency, school fees and Supa loan worriedly declined compared to the previous year, an indication that newer and more innovative products are the next frontier in the credit business.

“Indeed the 12pc growth in interest income has been driven by such products,’’ the report cites.

The report recommends that the growth in loan appraisal fees at 63pc compared to last year and 27pc over budget should be analysed to ensure competiveness and to eliminate the risk of it being a growth deterrent especially on the MPawa product.

It came out that the budgeted investment in treasury bills and bonds have not been made despite the increase in liquidity from Sh4.7 billion to Sh5.1 billion.

The SC called for a continuous review of credit products chiefly on mobile lending to claw back the Sacco’s membership.

The reconstituted body noted that a system should be put in place to ensure continued prudent cost control to sustain the growth and deliver a better return to the members at the end of the year.

The new team recommended that the Sacco should review its mode of operations with the Kenya Mortgage Refinance Company, a government initiative aimed at mobilising funds for affordable housing.

Kiloh

Despite the nobility of the initiative the new office maintained that the Sacco should adapt a risk-based approach through gauging if the Sacco’s investment in KMRC is in line with its strategic plan and in the best interest of its membership.

The SC noted that there should be a clear outline projecting a planned investment into KMRC beyond the initial Sh20 million.

A forensic investigation report submitted by Once Source Financial Services invited Sacco leadership to review raise matters for any clarification something that has not be done. A number of key areas were raised in the report among them; Micol Limited loans to the tune of Sh70 million. The SC has detected glaring irregularities that demonstrated clear intention to perform a fraud.

The audited accounts reveal that Micol Limited were for Royal City Hotel, an entity whose ownership and control is by Kajina Holdings Limited though Micol Limited did not have any shareholding in the Royal City Hotel Limited. It recommends the management to provide the current statusofte loan.

The forensic investigators discovered a scheme choreographed to loot millions of shillings from the Sacco through an illegal loan of Sh25 million to Migori Teachers Cooperative Society.

A red flag was raised because Migori Teachers Cooperative Society had just deposited a paltry Sh9,000 only and had joined Stima Sacco less than a month by the time of applying for the loan.

Corruption was uncovered in a case where Maseno University Sacco was loaned a whopping Sh75 million despite only being eligible for a loan of Sh90,000 and no security was provided by the borrower.

There is also a case where Lean Energy Solutions Limited had a loan of Sh44.5 million approved on insufficient deposits.

In another case, the forensic report found out that Triple Edge Media Limited also benefited under a racket where loans were being maliciously approved after it was awarded Sh29 million despite insufficient deposits at the time of applying for the loan.

To this effect, the new SC has issued a tough warning to the board that failed to act on the report through legal action as recommended.

“We are duty-bound to safeguard the members resources by ensuring that the funds are recovered and the irregularities do not recur,’’ the SC tabled.

The management is under pressure to provide the current status of each of the loans highlighted and the collateral details and the steps taken so far in recovering the irregularly awarded loans.

Owuor

Another move that is likely to throw the management into disarray is a surprise recommendation by the SC to give MPawa a separate structure as it was a fully-fledged private trading entity.

The team has recommended that the board to co-opt directors from within the Sacco’s leadership independent from Stima Sacco board to undertake the functional responsibility while the role of oversight remains with the Stima Sacco board.

Under the new changes, a report by the internal auditor on procurement of goods and services will be submitted to the SC on a quarterly basis.

It has also emerged that Sacco branch leaderships were locked out of the training policy where officials at the headquarter level have been enjoying heavy allowances from local and international workshops.

“The recommendation to have training policy expanded to include branch leadership is in the line with the initiative to develop and empower Sacco leadership at all levels,” SC report read in part.

It will now force the management to provide procurement reports for high level procurements after a discovery that the contents of POC reports for February and May 2019 presented did not provide sufficient details for the team.

The SC has ordered that the internal auditor reviews the procurement of goods and services of above Sh1 million and provide a report on compliance with the Public procurement and disposals Act 2015.

Further, the team demanded that a report highlighting any irregularities and confirming whether the POC is regularly and sufficiently briefed on procurement matters before it is submitted to the SC on a quarterly basis.

Awinja

The report took issues with the managements suspect actions towards recovery when it comes to non-performing loans which has turned out to be a key risk area for Saccos and other credit providing financial institutions.

According to the June 2019 internal audit report the NPL portfolio at the Stima Sacco stood at Sh538 million as at November 2018 but the management was only giving unsatisfactory explanations over the matter.

Weekly Citizen has learnt that a management letter for the full 2018 audit by the external auditor pointed out that non-compliance with the credit policy which is the main breeding factor for the growing nonperforming loans.

There were concerns that out of the 35 audit matters raised in the management letter, only seven have been conclusively resolved while 20 were partially resolved and eight are still outstanding over six months into the financial year.

Sensitisation of staff, branch leadership and the board on the critical importance of compliance to the credit policy is among the recommendations made to avert similar situation.

The report also called for stern and decisive action against cases of non-compliance to the credit policy both at management and board level.

 



Source link

Advertisement
Loading...
Loading...

Facebook

Loading...

Trending

Social Media Auto Publish Powered By : XYZScripts.com