Troubled Metropolitan National Sacco has been declared ‘technically insolvent’ amid efforts to salvage billions of shillings in members’ savings.
Commissioner for Co-operatives David Obonyo said the once giant group requires about Sh7 billion to resume normal operations.
“Metropolitan Sacco is technically insolvent and that is a fact. The little amount that we were able to spot and outrightly felt was mismanaged was about Sh7 billion. After the inquiry we surcharged the officials but they have gone to court and now you know in court we are not in control of the court process,” he said.
“That is what has really affected our strategy. We have stalled because the matter in court has been silent,” the official added.
Being technically insolvent means that Metropolitan cannot repay money owed and fulfil financial obligations such as bills and contractual monthly repayments as and when they fall due.
An investigation ordered by the State in 2022 unearthed questionable transactions including Sh49 million M-Pesa transactions by a single teller in the sacco’s Nakuru outlet and an overstatement of the institution’s premier loan facility by an excess of Sh7 billion due to suspected disbursements to non-existent members.
The audit further revealed that the management of the sacco, which draws its membership from teachers and civil servants, duped members with false dividend payments despite non-existent surplus reserves from which such disbursements are made. The dividends were paid out of the members' savings.
The Sacco management could also not explain why its cumulative assets were stated at Sh28 billion yet external auditors had established that the possessions were slightly above Sh14 billion in reality.
In addition, the audit revealed that about Sh490 million in non-performing loans were irregularly disbursed to sacco staff, while its branches in Kiambu, Thika and Kisumu could not account for Sh176.9 million.
Mr Obonyo said despite the insolvency, the state was unlikely to wind up Metropolitan sacco because it would jeopardise the recovery of members' funds and allow suspects to escape justice as the law stipulates that only the board of saccos can sue or be sued on behalf of the institutions.
“We are giving it time to see. The challenge is that when you wind it up these members will lose because you would have now closed the shop and told members you have no money, go home. You know in Co-operatives it is only the board that can sue or be sued on behalf of the sacco, ” the official said.
“That is what most of the people who have misappropriated the funds wanted. They had wanted the Sacco to be wound up. That was their original plan. You know if the Sacco is not there even the Commissioner cannot go to Court because you are going there on behalf of who. That is why we feel that right now there is some hope because we don’t want to dash away even the little hope that is remaining in members,” Mr Obonyo added.
The official said if the Sh7 billion is recovered, it will be able to pay off most of the members' deposits and at least allow Sacco to operate and provide services to members.
"Yes, it (Sacco) is operating, there are about 2,000 members who are still patronising the Sacco and there are some arrangements with the financiers to support them (Sacco) to meet some short term loans. But that alone cannot revive the Sacco. We have to recover that money (Sh7 billion) to get the Sacco up and running," he said.
