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Citizen Weekly

Monday, 16 February 2015

Egerton University Sacco boss son steals Sh1.9 million

The mess and poor governance ridden Egerton University Sacco has been visited by another massive theft and scandal executed by the son of the supervisory committee chairman Simiyu Matete.
Matete’s son, Evans is said  to have  disappeared  with a  whopping Sh1.9 million  about two weeks ago, a  day  before the Sacco’s annual general meeting is  said to have crossed the border  and is residing with his relatives  in Mbale town in Uganda.
Contacted, the chief executive of the Sacco Victor Ruto confirmed the theft saying that  the suspect named as Evans, is  being pursued by police  and asked the government for more  assistance to protect the Sacco. He said that Evans had earlier been reinstated against all morals standards and ethics after being sacked for stealing over Sh500,000 from the Sacco. He said the money will be paid by the insurance.
Prior to that, Evans who was reinstated  after  his father Matete threatened to take legal action  against  the Sacco, for accusing him of stealing over Sh500,000 from the Sacco, had taken Sh170,000 belonging to  a senior  member at the Laikipia University branch of the Sacco.
The legal threats  forced  then chairman of the  Sacco  Aggrey  Tshombes  to reinstate the son  who had been sacked  by  another former  chairman Job Kipkeput. The  re-employment of  Evans,  had also been opposed  by the  current  chairman Kepha Orina, a  government  representative  at  that time  and  a board  member Joyce Ondieki, but Matete’s exploitations of threats and flamboyance won the day.
Members expressed concern and wondered why the government had not moved in. They said  they  had collected  signatures  early last year  to  protest the  election  of Orina as the chairman  of the  board  and Owidi  as the  vice chairman and other executive officials but they were dismissed by the  county  commissioner for Co-operative  Nakuru  county  as trouble makers  who do not understand the law  and procedures.
During a meeting held on January 30 2015,  attended  by  three  immediate  former  chairmen Prof Muchiri, Tshombes and Kipkeput,  angry  members  said  they  would not accept further mismanagement of their society  with  the county  commissioner for co-operatives saying nothing  except  halftruths in some  instances outright lies without blinking an eye. Angry members of the Sacco told the county commissioner for co-operatives to shut up and sit down since he was saying nothing other protecting Orina and Matete
Njuguna  said  the  Sasra  report that was in circulation and  any other documents were real  and  said though they were meant for the  board and staff,  members had a right  to know  what is  happening in their  Sacco  as provided for  in the various laws  that  manage co-operative societies. Njuguna’s reaction came after  a  member of the supervisory committee Augustine Ndenda  requested for arrest  of members,  some of them senior lecturers  for  allegedly  having  documents  they were  not supposed  to have. He forgets that members of the Sacco can access any document of the institution for scrutiny and verification as provided  under Co-operative Societies Act Chapter 490, Laws of Kenya.
In an effort to  protect  his son and hide his criminal activities,  Matete  has been  saying that  his  son was dead and even requested for compassionate leave  to go  and search  for his sons body in the mortuaries  all over the  country as members  queried as why  he  believed  that  his son had died  with  members  money.
In his contributionduring the chaotic AGM, Kipkeput explained  how he had spearheaded the  Sacco to be affiliated to Sasra as a  way of promoting transparency and accountability and urged  the institution under  Carlius Ademba to save the organisation from outright mismanagement by taking immediate and decisive action.
Njuguna said that Sasra had carried an elaborate inspection of the Sacco’s operation and unearthed  serious  misapplication of the law and funds, misappropriation of funds as well as abuse of office to the extent that there is unparallel conflict of interest including employing of Matete son who has now caused a  huge damage to the Sacco.
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. A total of 626 loans accounts amounting to Sh110.8 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 ensure that financial condition is fairly stated. Further, the Sacco does not comply with the regulatory requirements especially capital adequacy ratios, liquidity ratio and nonearning 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 member’s 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 extend not complied with the procurement Act, rules and regulations in engaging management of services. The management of the procurement process has indicated to a larger extend partisan interests. The board has managed its affairs without full proof controls to safeguard member’s funds, especially segregation of duties when the supervisors are absent, incompleteness of the records among others.