An audit ordered by the Commissioner of Co-operatives David Obonyo in April of this year has unearthed a massive embezzlement of members’ funds leading to a loss of at least shillings 12 billion at the Metropolitan National Sacco Limited, implicating Current and former officials and management staff opening a lid on conspiracy between rogue Sacco officers and unscrupulous auditors and officials at Sacco Societies Regulatory Authority (Sasra).
Following an external audit, it has emerged that the Sacco has been declaring false financial numbers to paint a picture of an influx in dividends.
The board of management of the troubled Metropolitan National Sacco has been disbanded and in its place the Commissioner of Co-operatives has appointed a three-month care taker committee, Pending investigations.
“The sacco is on its deathbed.” An insider told The Informer.
The fake dividends were paid out of the members’ savings who are mainly drawn from teachers and civil servants.
Our efforts to reach the Chief Executive Officer of the Sacco Societies Regulatory Authority Peter Njuguna through call or text to clarify on whether there was involvement of Sasra officials in the scandal was futile.
However, the audit indicated that, the Sacco management has been manipulating systems to cover-up the mess, cooking accounts books which would be used to declare dividends and rebate despite non-existent surplus reserves from which such disbursements are made.
If has been found out that the fake dividends were paid out of the members’ savings. The management was also unable to explain why its cumulative assets were stated as Sh28 billion yet the external auditors had established that they were slightly above Sh14 billion.
The damning audit has 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.
Initially the 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.
The Sacco, which draws its membership from teachers and civil servants was registered on February 10, 1977 as Kiambu Teachers Sacco, then later Metropolitan Teachers Sacco until July 2, 2009, when the name changed to metropolitan national Sacco.
In April this year, the government constituted a team of top co-operative sector officials to investigate the financial and governance structures of the troubled sacco following incessant complaints of their operations.
To cover up the deep rooted mess and liquidity challenges, the sacco management had frozen has so dividend payment for the year 2021.
In a gazette Notice No 4558 dated April 22, 2022 the Commissioner for Co-operative Development David Obonyo ordered a probe into the by-laws, working and financial conditions, management, and the conduct of both present and past directors of the Metropolitan Sacco.
Obonyo has constituted a team of four officials from the Cooperative sector to carry out the investigations and report back the findings in 15 days and they included; Javel Murira (Director of Co-operative Audit), Dr David Gitonga Kahuthu (Manager in-charge of Regulations), Kennedy Otachi (Principal Co-operative officer) and Daniel Mue Mwatu (Senior Compliance Officer).
In 2019 when the massive internal fraud came to light, the Sacco, which has a membership of about 75,000 issued gross loans amounting to Sh16.7 billion against a total income of Sh1.99 billion in the year 2020, according to the Sacco Supervision Annual Report (2020).
Its total assets and deposits stood at Sh16.73 billion and Sh7.64 billion respectively in the same period.
Sasra officials are believed to be operating in cahoots with rogue sacco senior officials offered a safe shield to facilitate the loot and painting a rosy picture at the expense of members’ deposits.
