Big conspiracy on unclaimed assets billions

By Lillian Aluanga-Delvaux

For more than 35 years, Charles Njoroge has been chasing a dream that may be fulfilled with establishment of a body expected to revolutionise management of unclaimed assets.

Njoroge, 66, is among 2,800 former employees of the defunct East African Airways (EAA), fighting to regain monies accumulated through a provident fund before the company’s collapse in 1977.

A provident fund is a saving platform where both the employer and employee pay money into a fund. This money is then paid in lump sum (single payment) to the employee upon retirement. It differs from the Pension fund where such payments are made upon an individual’s retirement, but in fixed monthly installments.

The EAA was set up in 1946 and was jointly run by Kenya, Uganda and Tanzania before its dissolution 31 years later. Although the Airline’s former employees from Uganda and Tanzania were compensated in 2005 and 2006 respectively, their Kenyan counterparts are yet to get their refunds.

“We don’t know why the Government hasn’t paid us. We have been to the Retirement Benefits Authority, the Treasury and the Attorney General’s office, but with little success,” says Njoroge, who is the secretary to the Ex-East African Airways Staff Welfare Association.

Eight months after the Unclaimed Financial Assets Act (2011) became law, the Unclaimed Financial Assets Authority is yet to be appointed, delaying implementation of legislation that will see the likes of Njoroge reclaim their assets.

The Ministry of Finance is responsible for setting up the authority. Besides establishment of the Authority’s board, the Unclaimed Assets law also provides for formation of an Unclaimed Financial Assets Trust Fund, into which monies such as those held by third parties (like in the EAA case), will be paid.

Creation of the Unclaimed Financial Assets Authority was aimed at tracking down owners of huge amounts of unclaimed assets that remain in the hands of institutions like banks, insurance companies, social security funds, and utility service providers.

Never declared

Such assets are presumed forgotten because they remain unclaimed by the owners over a period stipulated by law. Examples of these forgotten assets are in the form of savings accounts, pensions, unclaimed stocks shares, unpaid dividends, unused customer credits, life assurances and property such as land and buildings.

Failure to have requirements that oblige holding institutions to declare assets as unclaimed, collapse or change in corporate structures are also factors.

Currently, the country’s value of unclaimed assets is pegged at various figures ranging between Sh9 billion and Sh200 billion. Joe Ngigi, the Chief Executive of the Unclaimed Property Assets Register (K) Limited, says it is difficult to know exactly how much there is in unclaimed assets.  He, however, cites a 2008 unaudited survey that points to a range between Sh38 billion to 84 billion. “The reality is that many people don’t know where their financial assets are,” he says.  Ngigi attributes this to a combination of lack of understanding and myths surrounding the writing of Wills. What this means is that once an individual dies, without leaving a Will (intestate), then it becomes difficult to know exactly what he owned, and how this should be distributed among his dependants. Other parties like financial institutions often hold such properties.

Major culprits

Commercial Banks are cited as the major beneficiaries of unclaimed assets, with estimates showing they may be holding up to Sh7 billion. Other beneficiaries include listed companies (a company whose shares are traded on a Stock Exchange) with Sh1.4 billion in unclaimed dividends, while insurance companies have about Sh200 million worth of unclaimed life policies. The National Social Security Fund (NSSF) is estimated to be holding over Sh100 million in unclaimed contributions.

The Unclaimed Assets law however makes it mandatory for all such institutions to make every effort to trace owners or beneficiaries of unclaimed assets or hand them over to the Unclaimed Assets Authority.

According to Ngigi the public has had poor record keeping tendencies, often ignoring the tracking of ‘small monies’ like caution money paid in learning institutions, which often remains in the hands of the establishment. Funds left in mobile money transfer accounts also form part of unclaimed assets.

Gwasi John Mbadi says delays in appointing the Unclaimed Assets Authority board may necessitate amendments to the Act.

“It would be unfortunate if that happens because parliament doesn’t have enough time to deliberate on this. This therefore, means that what we intended to cure through the law still remains to the detriment of the public,” says Mbadi.

In response to the delay in setting up the Unclaimed Financial Assets Authority, the MP alludes to the initial discomfort by some financial institutions towards the law, and alleges the same forces may not be keen on having the body instituted any time soon.