The government has ordered a fresh inquiry into the financial status of the troubled Metropolitan Sacco, which is embroiled in ongoing legal disputes, amid allegations that former officials defrauded it of Sh14.49 billion.
The Sacco is under mounting liquidity pressure following a surge in member withdrawals, forcing it to refund exiting depositors in line with orders from the Co-operatives Tribunal.
Its financial position has further deteriorated, with the institution closing 2024 with Sh7.41 billion in deposits against a Sh17.2 billion loan book, which is burdened by a 98.99 per cent default rate.
Commissioner for Co-operatives David Obonyo said the fresh probe seeks to establish the Sacco’s current financial standing and guide government intervention to protect remaining members from further losses.
“We want to establish the current status. The first inquiry was done around 2022, which is over three years ago, but the situation has not improved. We need to ascertain whether there has been any improvement or further decline so that we can take remedial action,” he told Nation on Monday.
“This is a quick inquiry to ascertain the status of the Sacco. We are not investigating wrongdoing. It is not like the earlier inquiry, which looked into how the losses occurred and who was responsible,” he said.
The newly ordered inquiry will focus on the Sacco’s by-laws, financial position, sustainability and overall viability.
In an official notice, Obonyo said: “Now therefore, I authorise Habil Olembo, Principal Cooperative Officer, Nairobi Headquarters, and Silas Okoth Dede, Assistant Director, Cooperative Audit, Nairobi Headquarters, to conduct an inquiry within 10 days from the date hereof at such place and time as may be considered expedient and duly notified by them.”
“We want to establish, even as the earlier inquiry is ongoing, the current financial status of the Sacco and how members are patronising the institution. If the financial position is not sound, we will have to take remedial action to safeguard whatever little members’ funds remain.”
The government is pursuing former Sacco officials over an untraceable Sh50 billion loan book and negative equity of Sh12 billion, developments that have raised concern among members over the entity’s future and triggered a wave of exit applications.
A growing number of members seeking to withdraw their savings have turned to the Co-operative Tribunal to compel payment, with court records showing a consistent pattern of rulings in their favour. The tribunal has repeatedly ordered Metropolitan Sacco to refund members’ deposits, together with costs and interest from the date of filing, further straining its already stretched liquidity position.
Last month, 19 former officials of the Sacco were charged with nine counts, including conspiracy to defraud the Sacco of Sh14.9 billion on various dates between 2012 and 2021.
An initial audit conducted in 2022 uncovered irregularities, including fictitious dividend payments, manipulation of financial records and irregular lending practices. The audit further found that the Sacco’s management misled members with false dividend declarations despite the absence of surplus reserves to support such payouts.
In 2023, the Commissioner for Co-operatives issued notices seeking to surcharge senior Sacco executives through court proceedings over the alleged misappropriation of Sh7.2 billion through fictitious dividend payments.
The first inquiry into the Sacco, commissioned in April 2022, examined its by-laws, operating and financial conditions, management structure, and the conduct of both current and former directors of Metropolitan Sacco, formerly Kiambu Teachers Sacco.
The probe was triggered by a surge in member complaints over a range of issues, including the management’s refusal to refund full share capital when members exit the Sacco, as well as delays in loan approval processes.
Other grievances included non-functional mobile banking services and the withholding of 50 per cent of members’ dividends.
Metropolitan Sacco is among five Saccos that the Sacco Societies Regulatory Authority (Sasra) barred from taking deposits earlier in 2026, allowing them to operate only under restricted credit-only licences.
The other Saccos placed under similar restrictions were Dumisha Sacco, Bi-High Sacco, Ol’Kaunsel Sacco and Digital Media Sacco.
