The Egerton University administration has
started investigations into the
current corrupt activities at the Egerton University Sacco and a senior co-operative officer in Nakuru county that
has literally brought the institution on
its knees as a result of fraud and abuse of office. As
this happened, the chairman of
the board Kepha Orina released
a fact-sheet defending his
tenure and the resultant fraud and abuse
of office.
In fact, he has offered members advance dividends that has not been approved by the annual general meeting, the supreme organ of the Sacco to calm the growing and unrelenting antagonism
to his leadership style.
He
has also threatened to discipline two
board members, Aggrey Tshombe and
Everious Chester, for not supporting his
way of leadership and the co-operative officer at the county offices in
an attempt to crush his perceived and real “enemies” that they are also accusing of leaking
information to the press, members and the public about the goings on at the
Sacco. They have, however, moved to court to sue Orina and the co-operative
officer.
A board member told Weekly Citizen through telephone that
members of the Sacco will soon
demonstrate against Orina, Owidi, Mwangi and the co-operative officer as “members are
unhappy and worried about their
Sacco and they will take to the streets soon”. As this was going on at the
Egerton University, the university’s ethics and integrity committee has taken
up the matter to investigate what is
considered to be the biggest financial sting to hit the Sacco patronised
by staff of Egerton University in the
less than 12 months. The committee headed
by a professor at the
university has interviewed a board
member who has provided scandalous revelations.
The committee is shocked that a senior cooperative officer received
Sh375,000 for allegedly writing a less than 10 page
election policy for the Sacco amid
financial misappropriation. This at the behest of the clumsy board chairman Kepha Orina who has promised to crush anybody including board
members and staff who does not bend over
to his malpractices and
predisposition.
In fact, the chief executive officer Ruto,
told Weekly Citizen when contacted that he
has been under constant pressure and harassment from Orina and the
chairman and secretary of supervisory
committee, Simuyu Matete and Augustine
Ndenda, for allegedly leaking information to members, former board
members and university administration.
Ruto
said that the co-operative officer has also threatened him on many occasions
for not being “loyal” to Orina, Owidi, Mwangi, Matete and Ndenda, the clique
that run the show at the university. He has appealed for protection from those
who care about the Sacco and members funds.
It is claimed that a co-operative
officer at the county has vowed to
protect Orina and his loyalists as the university Integrity and Ethic committee promises to get to the bottom of the scandal.
It is said that the co-operative
officer received thousands of
shillings before, during and after
the election of Orina. He is said to
have shoved aside memorandum of members questioning the credential of Orina to
lead the Sacco soon after the election.
At
Sasra, an official confirmed that such a memorandum had been received but no one listened to their advice to uphold
members quest for good leadership of the Sacco.
Among the issues being investigated is drawing of allowances to the tune
of over Sh3 million by Orina’s board in the last eight months with Orina
receiving the highest of Sh392,000.
The
co-operative officer recently declined
to see three board members Prof Kibe,
Joyce Ondeki and Chester when they
wanted to present hard facts about Orina and the manner in which the
Sacco was operating. They wanted a
special board meeting but the co-operative officer dismissed them as busy
bodies out to undermine Orina “good leadership”. He is said to have told them
to go and beg Orina to call for a special board meeting for him to attend.
Sasra
again told Weekly Citizen that the Sacco had loans to members portfolio
totaling to Sh1.225 billion as at August 31
2014 with a loan deficit reserve of Sh19.8 million against the
requirements of Sh38.9 million based on loan performance in line with
regulatory analysis of the loan listing thus the Sacco has under provided for
loan losses adding that the surplus was overstated by the under-provisioning of
loans loss.
While
the Sacco reported Sh129.8 million as interest income, only Sh94 million had
been received in cash form. This contradicts Sacco’s policy that income is
recognised when cash is received.
The
Sacco reports different figures for the loan portfolio in different financial
reports. The inspection assessed the credit risk exposure of the Sacco based on
the regulatory. Section 33 (3b) of the Sacco Societies Act, 2008 requires every
Sacco society to prescribe in writing an asset review system, which accurately
identifies risk and assures the adequacy of provisions for losses account.
The
inspection team reviewed the loans listing with a review of measurement of
credit exposure and especially establishing compliance with the regulatory
requirements on classification of the loans portfolio based on the performance.
About 626 loans accounts amounting to Sh 110.8 million could not be classified
due to incomplete information especially issue date and loan principal amount
disbursed. As at August 31 2014, about Sh84 million of the loans were not
performing, accounting for 15pc of loan portfolio that is at risk. The analysis
further reveals that there is an underprovision of loan loss of over Sh8.8
million excluding the unclassified loans.
This implies that the Sacco may not be able to
adequately monitor the credit risk exposure. Further, the Sacco had provided
for Sh19.1 million as the provision for loan loss against the requirements
of Sh38.9 million.
This
exposes the Sacco to potential capital reduction as a result of the inadequate
provision of loan losses and therefore, a possibility of collapse. The Sacco,
Sasra, said has not kept the financial information in the most accurate way
possible that would ensure that financial condition is fairly stated.
Further, the Sacco does not comply with the
regulatory requirements especially capital adequacy ratios, liquidity ratio and
non-earning assets to total assets ratio. The Sacco has not managed the credit
risk in compliance with the Sacco Societies Act by ensuring that the loan book
is accurate and complete in reporting, ensuring that loans are completely
secured and adequate provisions for the probable loan loss are made.
The loan administration is managed within the
confines of the credit policy and minimum requirement of the credit management
practices in the Act. In the internal and accounting controls, the Sacco has
increased risk exposure for members’ funds by allowing the overdrawing of
member accounts that also reduces the opportunities for potential revenue.
The Sacco does not observe the budget as a
planning tool for guidance and cost control and management. The Sacco has to a
larger extent not complied with the procurement Act, rules and regulations in
engaging and management of services. The management of the procurement process
has indicated to a larger extent partisan interests, hence services rendered
not meeting the expectation of the management and payment still being made,
managed treasury without full proof controls to safeguard members funds,
especially segregation of duties when the supervisors is absent, incompleteness
of the records among others ills.
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