LIKONI POLICE ON THE SPOT OVER INSECURITY IN MOMBASA COUNTY

A silent rebellion is playing out amongst co-operative societies in the country against apparent financial exploitation by the management of the key players in the sector whom they accuse of using them to enrich a few individuals at the helm while frustrating their financial needs.

A number of co-operative societies are considering formally writing to major international preferential lenders hoping to uplift the co-operative movement in the country, to ask them to suspend their assistance and compel the institution management to come clean on various financial transactions that are fraudulent and exploitative to them.

Targeted for the petition are key financial institutions in Western capitals that have been extending financial assistance to the banking institution including a major one based in Germany that has over the years extended soft loans and grants accruing as little as 2pc interest but many a time, they have been written off with the lenders believing that by uplifting will be financially healthy to boost the fortunes of the Saccos.

But according to multiple sources in the co-operative movement in the country, the assistance by the international lenders and donors has been regularly diverted to benefit a few and their private ventures.

According to the highly placed sources, the multi-billion shillings by the financiers would only make sense to co-operative societies if the institution would develop a strategy for giving the Saccos grants and loans at lower interest rates. However, the institution has insisted on charging high interest rates, often at the normal market rates like other commercial rates charged by other banks.

This has continued even when the major Saccos, who are the main shareholders and thus, actual owners of the bank have gotten frustrated as their requests for soft loans land on deaf ears in recent days.

Recently, a major Sacco with substantive shareholding at Co-operative Bank dropped negotiations for a soft loan of over Sh3 billion from the bank and immediately bagged the same from Co-op Bank’s rival Kenya Commercial Bank interest free.

News of the over Sh3 billion interest free transaction at KCB sent fears and palpable panic at Co-op Bank headquarters with word going round that other  major Saccos were in secret talks with KCB to access the same interest free loan facility or at least cheaper loans.

The Saccos are said to have even added a sweetener that if accorded the deal, they could switch their main accounts from Co-op Bank to KCB as soon as practicable.

It is said, Co-op Bank management in panic personally ordered top officials to pursue and convince the beneficiary of the over Sh3 billion soft loan from KCB to cancel the deal and instead to accept a bigger one for over Sh5 billion on similar terms. But the top managers of the rebel Sacco turned the team away even after daily persuasions for almost a fortnight.

That European and American multi-billion lenders are basically baby seating Cooperative bank financially and could be responsible for the bank’s miraculous recovery from near bankruptcy when long serving Erastus Mureithi left.

The Saccos are also riled by the architecture of the Class A shares which have become a liability to them as they are worthless in most cases accruing dividends that are never given in monetary terms but as additional, worthless shares which on selling through the bank, they are deliberately undervalued. They now see the Class A shares they hold as dead stock that has stagnated their financial growth.

They are blaming the management for the shares mess noting that they should have allowed them to be selling them at the Nairobi Securities Exchange like others and develop alternative methods of blocking the much feared corporate raids.

According to them, many members of the co-operative movement in the country are growing poorer than they were yet the financial institution which they started deliberately to anchor their financial advantage has ignored them.

They now want the intended make over of the bank to be pushed by the newly hired global advisory firm, McKinsey and Company to force it to be announcing results of their direct assistance to Saccos annually.