The High Court has dismissed a petition by former officials of the troubled Metropolitan National Sacco challenging the investigations that unearthed financial irregularities at the entity about three years ago.
Lady Justice Aburili Roselyne Ekirapa dismissed the petition by the former Sacco officials on May 21,025, and directed them to pursue their grievances through the appellate mechanisms provided under Section 74 of the Cooperative Societies Act.
“Accordingly, this Court therefore finds that the applicants (Sacco officials) and the interested parties had a clear, available, and effective remedy under Section 74 of the Co-operative Societies Act which they have failed to pursue and they have also not sought to be exempted from resorting to the appeal mechanisms stipulated in law,” the Judge said.
“In the result, I find that the application dated February 14, 2022, offends the exhaustion doctrine and is premature. The Notice of Motion is hereby struck out,” the Judge further said.
The Sacco officials had filed a petition requiring the court to quash the inquiry order dated April 20 2022, which had recommended the dissolution of the management and supervisory boards of the Sacco, including all administrative actions, decisions, or measures initiated by the Commissioner of Cooperatives, hinged on the disputed inquiry report.
They also wanted the court to issue orders prohibiting the Commissioner for Co-operatives and the Attorney General (AG) from dealing with the disputed inquiry report, decisions, findings/recommendations in whatsoever manner detrimental to them (officials).
Questionable transactions
A probe ordered by the Commissioner of Co-operatives, David Obonyo, in April 2022 unearthed questionable transactions, including Sh49 million M-Pesa transactions by a single teller in the sacco’s Nakuru branch 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, hoodwinked members with false dividend payments despite non-existent surplus reserves from which such disbursements are made. The fake dividends were paid out of the members' savings.
The Sacco management could also not explain why its cumulative assets were stated at Sh28billion yet the external auditors had established that the possessions were slightly above Sh14billion in reality.
Additionally, the audit revealed that some Sh490 million non-performing loans were irregularly disbursed to Sacco's employees, while its branches in Kiambu, Thika, and Kisumu could not account for Sh176.9 million.
The Sacco board members were also unable to account for about Sh703 million for the period 2015-2022.
Following the incriminatory findings, the audit recommended the disbandment of the board, investigation of the Nakuru branch teller over the suspect Sh49m M-Pesa transactions, and that the officers who falsified the loan book above Sh14 billion be pursued and held accountable.
The probe also recommended that all the Sacco staff holding non-performing loans be investigated and the amount recovered, while those who had left the employer be pursued for repayment of debt.
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. The Sacco has eight branches and 15 satellite ones, but only two, Kiambu and Koinange, are profitable.
