An audit has exposed a massive theft and embezzlement scheme at Metropolitan National Sacco, implicating both former and current senior staff, as well as board directors.
The 47-year-old Sacco, originally established as Kiambu Teachers Sacco, lost an estimated KSh 12 billion, shaking the confidence of its members and raising concerns about the security of their savings.
Origins of the Metropolitan National Sacco Fraud
The scandal surfaced three years ago when members began reporting difficulties in withdrawing funds or accessing loan facilities.
In April 2022, the Commissioner for Co-operatives Development, David Obonyo, appointed an audit team that revealed the scale of the fraudulent activities.
Key Findings
The audit uncovered numerous irregularities, including:
- Illegal Withdrawals: KSh 49 million was reportedly stolen by a teller at the Nakuru branch.
- Fake Loans: Approximately KSh 7 billion was disbursed to non-existent members.
- Dividends Mismanagement: Directors authorized dividend and rebate payments using members’ deposits instead of surplus funds.
- Inflated Balance Sheet: The Sacco’s balance sheet was overstated by KSh 14 billion, doubling the reported figure to KSh 28 billion.
- Employee Loans: Fraudulent loans amounting to KSh 490 million were issued to staff.
- Branch Discrepancies: Cash totaling KSh 176.9 million went missing from branches in Kisumu, Thika, and Kiambu.
- The fraudulent activities included forgery, falsification of documents, and unauthorized deductions from members’ accounts.
Metropolitan National Sacco History
Metropolitan National Sacco was registered in 1977 as Kiambu Teachers Sacco. It later rebranded to Metropolitan Teachers Sacco and eventually became Metropolitan National Sacco in 2009.
Initially catering to teachers and civil servants, it expanded its membership to salaried individuals, businesses, commissions, and minors.
Despite its growth, only two of its eight branches—Kiambu and Nairobi—are profitable. Other branches, including Kisumu, Nakuru, Thika, Kajiado, Limuru, and Bungoma, alongside 12 satellite offices, continue to struggle.
Government and Regulatory Response
In light of the revelations, the Senate Committee on Trade and Tourism, chaired by Okiya Omtatah, has requested the Teachers Service Commission (TSC) to halt remittances to Metropolitan for members who have withdrawn from the Sacco.
The committee plans to summon Cooperatives Cabinet Secretary Simon Chelugui and TSC CEO Nancy Macharia to address the disappearance of members’ funds.
Warnings from Regulators
The Sacco Societies Regulatory Authority (SASRA) has urged SACCOs to enhance internal controls to guard against insider fraud, a common issue perpetrated by staff.
SASRA’s Sacco Societies Fraud Investigation Unit (SSFIU) emphasized the importance of conducting thorough due diligence on employees and monitoring credit scores when purchasing loans to avoid financial vulnerabilities.
A Call for Vigilance
The Metropolitan National Sacco scandal serves as a stark reminder of the need for robust governance in SACCOs to safeguard members’ hard-earned savings.
As investigations continue, members and stakeholders await further action to recover lost funds and hold those responsible accountable.
