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Secret report reveals rot at Kenya Bankers Sacco – Weekly Citizen

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Officials of Kenya Bankers Sacco Society Ltd Sacco have deprived members of millions of shillings and defrauded the Kenya Revenue Authority, according to a report prepared by the Sacco Society Regulatory Authority.

Sasra conducted an onsite inspection exercise on the operations of Kenya Bankers Sacco Society Ltd. Sasra has powers to conduct inspections on a Sacco society at any time. The inspection opened a can of worms at the Sacco where rot was unearthed.

Sasra observed that there were serious lapses in the Sacco’s credit management practices that have exposed it to a high credit risk, thereby threatening its sustainability.

Dede

The lapses include failure to adhere to loan approval processes, members of the credit committee approving loans beyond their recommended limits as per the credit policy, and loans being approved without the requisite documentation such as members’ latest payslips being some of the key questions raised by the regulatory body.

The management of the Sacco also involved itself in noncore business activities mainly real estate and land projects, which have had a huge negative impact on the Sacco’s financial position and consequently led to reduced activity in the Sacco’s core business of advancing credit to its members.

Impaired investments include Shaba Housing Sh389, 537,794 and land projects 68,568,877, totaling to 458 106,671 which the authority says their recoverable amount is lower than their carrying amount and thus must be written off the books of the Sacco.

Chisaku

They say the Sacco maintained an executive committee of chairman, treasurer and secretary who were operational directors involved in day-to-day running of the Sacco such as in the approval of payment vouchers contrary to Regulation 59 (3) which prescribes that the board of directors shall consist of elected non-executive members involved in general strategy and oversight.

Vincent Chisaka is the chairman, Gertrude Wabunga his vice, Dennis Owino secretary, George Namwoso treasurer, Sally Oimbo member together with Vincent Mutambo, Ahmed Omar, Paul Kinge and Elijah Dede.

Owinio

Due to underhand deals, the Sacco supervisory committee chaired by Maureen Kivava, RensonChikololo, secretary, and John Mwangi, member, has been compromised and is on the management payroll and cannot raise any issues.

The report says the Sacco board and management have not been charging tax on the board allowances but have instead been irregularly paying the applicable tax obligations using members’ funds, thus passing the tax burden of individual directors to members. They also pay excess allowances to directors.

The Sacco’s board and management has also been irregularly deducting Sh2000 per sitting from the taxable amount per director disguising it as allowable per diem deductions in a well calculated move to reduce the tax payable and deny the government tax revenue.

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Oimbo

The Sacco purchased land number 12715/143 from Mildred Mbuya Muli on November 26 2012 for a sum of Sh50 million plus additional costs amounting to Sh2.6million. The Sacco later resold the same piece of land to NK Brothers for Sh70 million as evidenced by a sale agreement dated January 14 2016.

On February 1 2016 Sh7 million (cheque no 00849) being deposit of purchase price for the aforementioned piece of land, was deposited in National Bank (Kenya Bankers Investment Co-operative Account number 01042087888700 Amanah). Hence, a total of Sh69,065,050 was received by the investment company towards the purchase of the land.

A review of the investment company bank account established that the investments company paid the Sacco Sh60 million in regards to the sale of the land as follows: May 6 2016, Sh35 million was transferred to Prism Investment Ltd to finance the completion of the Shaba project, on June 10 2016, Sh25million was transferred to the Sacco’s bank account at Citi Bank,

Namwoso

However, there was no evidence showing that the balance of Sh9million owing from the sale of the land was ever received by the Sacco from Kenya Bankers Investment Co-operative, its sister company charged with investments though run by the same directors and managers of the Sacco notwithstanding.

The Sacco also engaged Packlines System Limited in 2015 to provide and implement a mobile banking software and again later in 2016, to facilitate an update of their core system without advertising the tender which runs into millions of shillings.

The contract is also open which ended up as its directors cannot be traced at the government registration offices. The Sacco lost Sh300, 000 when its systems were hacked,

The report recommends that all the payments made to the service provider over and above the prescribed rates be immediately recovered.

It also recommends that extra money paid to the directors and managers be recovered from the salaries and allowances and that tax be remitted to the KRA.

It also further advocates that branches categorised as Nyanza, Western, South Rift Nairobi, Coast, Central, Eldoret, Kitale and Meru which consumed Sh29,504,689 million in branch AGM expenditures and Sh11,084,490 in allowances between 2012 and 2018 be dissolved as they were serving no purpose.

The Sasra inspectors who prepared the report were Daniel Kimoli , Stephen Michubu , Lorna Olala, Nelly Kulei and Daniel Mwatu.



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