Members of the troubled Ekeza Sacco have received Sh750 million in refunds after an out of court settlement under which the government appointed investment banker Jimmy Kagoni as acting CEO.
The refunds were made in the forms of cash and land upon members’ request, leaving Ekeza with Sh250 million, which plans to clear soon.
An audit by the Commissioner of Cooperatives in 2018 showed that the sacco had a cumulative Sh2.5 billion in savings between 2014 and 2018.
But the report noted that more than Sh1 billion had been transferred unlawfully to the accounts of Gakuyo Real Estate, owned by former Ekeza chairman David Kariuki Ngari.
The revelations caused panic, with members seeking to make immediate withdrawals of their savings and deposits.
Ekeza management and members reached an out-of-court settlement and the case was withdrawn via an October 18, 2019 letter from the Attorney-General’s office to the Commissioner of Cooperatives.
Consequently, the commission last year asked mobile phone operator Safaricom and Equity, NCBA and Cooperative banks to reactivate sacco’s M-Pesa paybill number and accounts that had been frozen in March 2019 at the height of the dispute.
The Ministry of Cooperatives then seconded Mr Kagoni and a caretaker committee in September last year to the sacco to oversee refunds to members within a strict budget.
The Commissioner of Cooperatives also recommended that Gakuyo’s operations be separated from Ekeza Sacco.
“Part of my mandate was to help members recoup their funds and we drafted a recovery strategy that was agreed upon by the concerned parties to help the sacco do so and resume operations,” Mr Kagoni said.
The strategy included Mr Gakuyo’s agreeing to forfeit some of Gakuyo Real Estate’s properties as a refund to what he owed Ekeza sacco.
“What was supposed to be refunded back was Sh1 billion and it was agreed that properties worth Sh881 million would be handed over to the sacco to compensate grieving members and that is what we have been using to pay back our members,” Mr Kagoni said.
The properties are located in Subukia-Solai, Joska, Gwa Kungú, Kilimambogo, Mariakani, Konza Goshen, Konza Phase 6 and Nanyuki kwa Daiga.
“I have provided the said properties to Ekeza Sacco Society Limited to perfect, subdivide and sell to their members and the general public as a refund to monies owned by Gakuyo Real Estate Limited and myself to Ekeza,” an affidavit says.
Some Sh250 million remains to be distributed to sacco members, Mr Kagoni said.
The first batch of refunds was made on November 21 last year, when 3,425 members received over Sh441 million for savings worth Sh2,000 and below.
Some 1,431 members with share deposits of Sh50,000 to Sh100,000 have also filed withdrawal forms and will get over Sh102 million in cash.
“Eighty per cent of the members had requested their refunds but there are 20 per cent who are okay and would want to continue,” Mr Kagoni noted.
He added that those who want refunds in the form of land are free to make the request as the properties forfeited by Mr Gakuyo are yet to be exhausted.
But those wishing to get cash refunds might have to wait a bit longer as the sacco pushes members to repay their loans.
The cumulative amount owed to the sacco by members totals more than Sh400 million, including the value of vehicles.
“We are having a very serious challenge in getting people who owe us money to pay us back,” Mr Kagoni said.
“Some of them have vandalised the vehicles that were financed by the sacco’s money, others have removed the tracking devices, making it difficult for us to track them, but we have engaged the authorities in having this solved.”
