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Kisumu: 12 officials suspended, accused of stealing 16 million shillings.

Posted by African Press International on June 7, 2016

By Dickens Wasonga.

12 senior officers of MEK Savings and Credit Cooperative Society limited have been suspended over the loss of over sh. 16 million, belonging to the SACCO which they are accused to have embezzled while in office.

The SACCO officials received their suspension letters signed by the no nonsense Kisumu county Secretary Mr Humphrey Nakitari.

A letter dated 27th of May this year , indicate that the 12 will face disciplinary action which include being arraigned in court and eventual dismissal from service without benefits.

Following persistent allegations of funds mismanagement by the executive members of the SACCO, the commissioner for cooperative development ,through an inquiry order of September 2014, appointed the deputy director of of cooperative audit Mr Geoffrey Njangombe and chief cooperative officer Mr Wanjohi Kiama to conduct an inquiry.

The 18 days exercise was confined to the operations of the Sacco at its headquarters from the year 2013 to 2014 and involved review of relevant documents and interview of management committee ,supervisory committee and staff.

The SACCO, registered in 1972 has been experiencing cash flow problems over the years due to irregular and unpredictable remittances from the defunct Kisumu municipal council.

According to the report by the inquiry team, the society also suffered mismanagement by successive committee members and staff as evidenced from several inspection reports.

One such inspection was initiated in February last year which highlighted cases of embezzlement of funds.It recommended for institution of an inquiry to look into the financial affairs of the society.

The main objective of the society was to promote thrift among its members by providing them with the opportunity to accumulate savings and thereby create a source of funds from which loans could easily be made available at affordable terms. Its members are drawn from employees of the defunct municipal council of Kisumu who are now under the county government.

At the time of the inquiry, the society’s premises was found closed and the inquiry officers while reporting for the exercise had to brake the padlocks placed by former officials so as to gain access to the society’s offices in Arina.

To the surprise of the interim officials , the following items were found missing; nine Ericson computers,six dell computers,one EPOS printer,one Sony TV set,one dell lap top,and one EPOS receipt printer.

The inquiry noted that there were divisions in the immediate former management committee with the executive excluding non executive members in most of the decisions .

Example of such decisions is the convening of a special general meeting of 13th December 2014 where only the executive and the CEO were involved.

Another such unilateral decision by the executive and the CEO was the opening and closing of a bank account no.01120012350703 at cooperative bank towards the end of 2014.

Other notable non inclusive decisions by the executive included awarding of loans and refund of members deposits and Christmas savings.

On book keeping and accounting the inquiry team observed that the state was deplorable.

The cash book, which is the principal book of accounts has not been updated since November 2013 and as such the the society did not have audit-able records for the year 2014, no wonder PFK Certified Public Accountants returned a disclaimer opinion on the financial statements for the year ending 31st December 2013.

The inquiry team also noted the society was not maintaining other key documents such as assets register,members register,and loans register.

MEK ,had no procurement policy and procurement committee . As a result goods and services were being procured through single sourcing without regard to public procurement and disposal act. examples of major items procured irregularly included computers in 2011and 2014 and security services in 2013.

The appointment of PKF certified public accountants was also done in contravention to section 25( 4) of cooperative society’s act , according to their report of the inquiry, since the management committee had no general meeting authority to appoint and remunerate the firm.

The report indicate that this irregular appointment might have contributed to the escalation of the audit fee from sh 25,000 in the year 2012 to sh 300,000in 2013.

On management of cash the inquiry established the society was making payments to members on account of loan on cash basis up to December 2014. under this system the society would establish cash demand and withdraw the money through the manager and payments would be made in cash at the society’s premises.

This system, they noted ,was not only expensive by also prone to misuse by the officials. the system also posed a security threat given the society premises did not have banking hall facilities.

In an ideal situation,the report suggest loan application forms should first be evaluated for eligibility by the loans department and CEO before being forwarded to the credit committee. the inquiry team noted the practice at MEK was that the CEO was the final authority after the loans have been awarded by the credit committee.

This means the CEO and the executive have the final say to who is to be given loan and how much to be given thus diluting the role of the credit committee.

This practice, the team observed, has encouraged favoritism and nepotism in awarding of loans. some members are favored by the executive by being given loans beyond their eligibility at the expense of the other deserving members, the team noted.

Among other findings, the inquiry team states that the executive committee was unable to explain how ksh 15,980,000was expended.

It also was established that the rest of the members of management were not aware of the secret account and all along were made to understand that ksh 16 million was recouped by the bank to settle working capital loans. the secret account was closed by the chairman,treasurer ,vice chairman and the CEO on the 7th January last year.

In the opinion of the team, the lost 16 million was withdrawn and converted into own use by the chairman, vice chairman , treasurer , and the CEO, which they describe as an outright case of embezzlement of the society’s funds.

The list of MEK officials to be surcharged as recommended by the inquiry includes the chairman Samson Omondi Chillo, vice chairman Chrispin Otieno Pudo,treasurer Francis Ochieng Osure, Margaret Awuor Odhiambo, Hon secretary, Jacton Ocheche ,committee member,Mary Anne Akoth committee member ,Eric Onyango Otieno committee member, Peter Oganda committee member Jenifer Moyoyo ,Joseph Olum committee member and Samson Otieno Adede CEO

The suspension of the 12 officers from the now defunct municipal council comes hot in the controversial exit of the immediate former city manager Doris Ombara who was accused of failing to account for Sh 27 million during her tenure. She went to court to battle the move to removal her and the matter is still pending in the Kisumu court.


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