Harambee Sacco stopped the sale of its 16 prime residential property in Nyali, Mombasa, after realising that the bond issued by the winning bidder was forged.
The Sacco, whose members are largely drawn from public sector institutions, was last year on the verge of selling the four-bedroom maisonettes before Equity Bank disowned a Sh48 million bid bond presented by Paradigm Business Solutions Limited.

Paradigm had beaten five other bidders – Basra Investment Limited, Peter Ndubai, David Kinyae Isika, Regional Hotel and Suburbia Limited —to the houses with an offer of Sh272 million for the units. The houses that also have servant quarters, had been valued at Sh14 million each in 2010.

Documents tabled before Parliament’s Agriculture Committee show that the cancellation was recommended by the society’s Tender Analysing Committee.

The Sacco’s chief executive officer James Wandera told MPs that Equity Bank Westlands branch denied issuing the bid bond on September 22 last year.

“The management of Equity Bank, Westlands indicated that the Headed paper used was not theirs and retained the letter Ref.EBL/CORP/BBG00299890 dated September 22, 2011 for investigations,” said Mr Wandera. A copy of the said bid bond bears a stamp of Equity Bank Westlands branch credit manager a Mr R Mutaanja dated October 25, 2011.

Mr Wandera said the Tender Committee recommended that the sale of Harambee Sacco Nyali Houses be re-advertised, a position adopted by the board and the Annual Delegates meetings held in April this year.

“The Disposal Committee of the society is scheduled to carry out the Board Survey of the said houses next month so as to facilitate fresh invitation of tenders in the press for sale of the said houses,” Mr Wandera said.

Board chairman Macloud Malonzo told the committee on Tuesday that neither of the society’s property had been sold.

“We have title deeds of all the 16 houses in Nyali as well as our properties in Nairobi, Busia and Kisumu,” he said. The Nyali houses have been vacant since 2006, Mr Wandera told the committee chaired by Naivasha MP John Mututho.

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Kenyan Government employees stand to lose vast sums of money as the country’s second largest savings and credit society, Harambee Sacco, faces collapse.
More than Sh4 billion ($A5 million), belonging to 100,000 Government employees, stands to be lost.
A confidential inspection report shows Sacco has been using creative accounting practices to cover up alleged fraud and non-payment of loans by some members.

The inspection found that Sacco did not meet a number of prudential parameters and was trading with insufficient capital.

It also found that it understated its bad debts which led to inadequate provisions for loan losses.

The report found that cash was being skimmed from automated teller machine transactions and other withdrawals and that part of a recent loan from a bank was to pay dividends of Sh633 million ($A7.1 million).

The Credit union’s building, which the Parliamentary Service Commission is planning to buy for the expanded National Assembly, was used to secure the loan.

“These are pointers to the fact that Sacco is facing acute liquidity problems and possible financial distress, which may impair its stability and existence in the long term, unless quickly and effectively addressed,” the inspection report said.

It implicated the Chief Executive Office of Harambee Sacco as well as the Head of Information Technology, the Finance manager and Chief Accountant in its charges of mismanagement, but did not identify them by name.

It recommended a thorough investigation, full reconciliation of Sacco’s transactions and the recovery of billions of shillings belonging to members.

The Finance Manager of Harambee Sacco, who was due to appear before the Agriculture, Cooperatives Parliamentary Committee for questioning over the alleged financial scams, was shot dead by unknown people days before he was due to make his presentation.

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