The board of management of the troubled Metropolitan National Sacco Ltd has been replaced with a caretaker committee to pave way for deeper investigations after an audit revealed massive irregularities.
A probe ordered by the Commissioner of Co-operatives David Obonyo in April unearthed irregularities such as fictitious dividend payments, manipulation of financial books and irregular lending.
Questionable transactions, including Sh49 million in M-Pesa transactions by a single teller at the Sacco’s Nakuru branch and an overstatement of the institution’s premier loan facility by an excess of Sh7 billion due to suspected disbursements to non-existent members are some of the malpractices that have been exposed.
The audit further revealed that the management of the Sacco, which draws its membership from teachers and civil servants, hoodwinked members with false dividend payments despite non-existent surplus reserves from which such disbursements are made.
The fake dividends were paid out of the members’ savings. The management could also not explain why its cumulative assets were stated as Sh28 billion yet the external auditors had established that they were slightly above Sh14 billion.
Additionally, the audit revealed that some Sh490 million non-performing loans were irregularly dished out to its employees while its branches in Kiambu, Thika, and Kisumu could not account for funds totalling Sh176.9 million.
Following the damning findings, the audit recommended the disbandment of the board, investigation of the Nakuru branch teller and that the officers who falsified the loan book be held accountable.
It was also recommended that all the current and former staff holding non-performing loans be investigated and the amounts recovered. In addition, the auditors suggested a freeze on further investments in non-core business by the sacco and that all loss-making branches be closed. The Sacco has eight branches and 15 satellite ones, but only two – Kiambu and Koinange – are profitable.
Sacco Societies Regulatory Authority (Sasra) chief executive Peter Njuguna told the Nation the caretaker committee will draft a plan to implement the recommendations “within 90 days starting Saturday”.
The Nation has established that Sasra, Commissioner of Co-operatives, the Directorate of Criminal Investigations, the Ethics and Ant-Corruption Commission and the Office of the Director of Public Prosecutions will liaise with the caretaker committee for a deeper internal audit and hold to account those found culpable.
Data presented by the Metropolitan management had indicated that the Sacco had deposits of Sh7.6 billion by December 2020 and total assets of Sh16.7 billion, making it the sixth-largest Sacco according to Sasra reports. Its non-performing loans amounted to Sh9.3 billion, forcing it to provide Sh6.7 billion as insurance during its annual general meeting in April.
During the meeting, members approved a raft of changes to cushion it from collapse. It was decided that the Sacco goes after serial defaulters, cuts costs, and overhaul its governance structure to meet legal requirements and reflect the diversity of its membership.
It was also decided that members with big loans contribute more amid revelations that there have been cases of people with loans of up to Sh2 million making monthly contributions as low as Sh3,000. It was further agreed that the society gets a new board and chairperson after members approved proposals to have board members who retire automatically leave the board.
Metropolitan was registered on February 10, 1977 as Kiambu Teachers Sacco until July 2, 2009, when the name changed. It says on its website that it has more than 100,000 members.
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