Teachers lost Sh15 billion through fraudulent schemes but Sacco bosses blamed for the looting are walking free because a probe by the Directorate of Criminal Investigations (DCI) has stalled for three years.
The fraud plunged the once giant Metropolitan National Sacco into financial distress after most members, mostly civil servants, fled, dipping its membership to 10,000 from 100,000.
An audit conducted by State Department for Co-operatives and the Sacco Societies and Regulatory Authority (SASRA) exposed how senior officials of the Sacco engaged in conflict of interest, cooked financial books and made fraudulent withdrawals citing phony investments.
To cover up for the theft, Sacco bosses hoodwinked investors with fake dividends paid through bank loans to conceal the fact that the financial institution was in the red.
After the scandal was exposed, the Commissioner for Co-operative Development David Obonyo, through a gazette notice dated April 22, 2022, directed the Director of Co-operative Audit to investigate how the former board of directors of the Sacco, departmental heads and senior managers reportedly siphoned Sh15 billion, wiping out savings for thousands of members.
Nearly three years later, Nation has learnt that the investigations have stalled and the profiteers of the insider fraud are walking free.
Some of those adversely mentioned in the report have been securing court orders blocking their arrests. The DCI has not gone beyond interrogation of the suspects and neither have authorities sought the court’s permission to freeze assets of the suspects pending prosecutions.
On Tuesday, the Commissioner for Co-operative Development David Obonyo told Nation the big concern over the years is that the DCI has only been summoning suspects to record statements without progression to prosecutions.
''Of course it is a big concern when you hear that nearly three years after what happened at Metropolitan Sacco, it is only summons for those who are said to have looted the Sacco. Together with Sasra, we have supplied the DCI with everything they need in terms of documentation to pursue the suspects. Maybe you can talk to them and they can explain to you why because I also don't know why,'' Mr Obonyo said on Monday.
Reached for a comment, DCI director Mr Mohamed Amin promised to get back with information.
''We discuss tomorrow,'' Mr Amin texted. By the time of publishing this story, Mr Amin had not responded to our queries on the status of investigations against those implicated in the fraud.
On October 25, 2023, Sasra further wrote to the DCI on the investigations but the regulator now says it has been ignored.
The letter written by Mr Peter Njuguna, who is the chief executive of Sasra, detailed the fraudulent activities such as cash withdrawal from banks that were never recorded in the Sacco’s Treasury books, presentation of a falsified copy of Annual General Meeting (AGM) proceedings seeking approval of borrowing from the office of the Commissioner for Cooperative Development, unauthorised transfer of Sacco funds to Metropolitan Investment Cooperative Society and fictitious cash transfers.
''Most people keep asking me the same question you are asking me, that is, where was Sasra when all this internal fraud and conflict of interest was happening at Metropolitan National Sacco. And to answer you, let me say it again, Sasra and the State Department for Co-operatives were the initial whistle-blowers that things were not okay at the Sacco. We made interventions on the running of the Sacco and eventually submitted our report and recommendations to the DCI on who stole what. But now everything (investigations and prosecutions) seem to have come to an end,’’ Mr Njuguna told Nation last Thursday.
Mr Njuguna took issue with a letter dated October 9, 2023, authored by a Mombasa-based non-governmental organisation - Commission of Human Rights and Justice- addressed to the DCI and Assets Recovery Unit.
In the letter the organisation petitions the DCI to investigate Mr Njuguna over suspected fraud and money laundering at Sasra and auctioning of Sacco licenses to the highest bidder.
''When you look at that letter from Commission of Human Rights and Justice and more so when it is dated, it came almost immediately after I recommended the investigations and prosecutions of former executives of Metropolitan National Sacco who siphoned Sh16 billion from the Sacco and wrote to DCI to go after them. I told the DCI I am ready to be investigated over any economic crime as claimed by the Commission of Human Rights and Justice and they could not provide any evidence to back their allegations,’’ Mr Njuguna said.
Efforts to contact the Commission of Human Rights and Justice for a comment were unsuccessful since even their letter to DCI had no reference number to call back and they have no online presence and any known physical address.
Mr Njuguna said the only way members’ deposits can be secured in case of internal fraud or liquidation is by urgently operationalising the Deposit Guarantee Fund as a safety net to ensure refunds in case a Sacco is in problems.
Ms Esther Kamau, who is the chairperson of Metropolitan National Sacco, said in less than a year, they have been forced to reduce the number of staff from 109, 000 to 33,000.
A huge number of customers have also fled the Sacco which has seen its membership shrink to 10,000 from 100,000, she added.
''I cannot authoritatively say when we will return to profitability but the good thing is that we have good structures now and we are currently advancing salary loans, school fees loans as well as Fosa personal loan,’’ Ms Kamau told Nation.
She said she was hopeful that investigations and prosecutions would be speeded up and the individuals who siphoned from the Sacco have their assets seized by authorities, sold and proceeds ploughed back to the institution.
The Sacco was recently forced to close down its Nairobi office because rent was not affordable. It now operates from Kiambu town under its commercial building with two branches in Thika and Limuru.
Metropolitan National Sacco was registered on February 10, 1997, as Kiambu Teachers Sacco and continued to operate as such until July 2, 2009, when it was granted the change of name certification.
