Government takes over troubled Ekeza sacco's money, property

Ekeza Sacco chairman David Ngari

The Government has taken over troubled Ekeza Sacco in an effort to protect thousands of investors.

The sacco will be liquidated and the cash realised used to pay depositors.

The process will take one year, according to Commissioner for Co-operative Development Mary Mungai.

Liquidation is the process of converting company assets into cash, for instance, by selling them, to pay a debt.

Ms Mungai cancelled the sacco's licence two weeks ago and ordered its liquidation.

Assistant Director for Co-operatives Stephen Kamau and Principal Co-operative Officer Philip Ukhevi will oversee the liquidation process.

“I authorise them to take into their custody all the properties of the said society, including such books and documents as are deemed necessary for completion of the liquidation,” Mungai said through a gazette notice dated March 26.

Sacco officials had said the firm had more than 50,000 members. It reportedly gave out Sh2.6 billion in loans.

Mungai had advised anyone aggrieved by the decision to close down the sacco to register their complaints with the Industry, Trade and Co-operatives Cabinet secretary.

This order sets aside an earlier directive that deregistered Ekeza pending streamlining of its operations to suit sacco requirements.

Offices countrywide

The commissioner had ordered the sacco to close down all its 26 offices countrywide until it complied with the law.

The liquidation will see its assets sold and money in the sacco's accounts use to repay creditors.

In a case filed to challenge the deregistration of the society, Ekeza Chief Executive Officer Gladys Muriithi termed the licence cancellation a breach of justice.

In her affidavit, she argued that the closure had put in jeopardy more than 50,000 sacco members.

Ms Muriithi argued that revoking the licence would also undermine the recovery of Sh2.6 billion members had taken as loans.

“The respondent did not inform the sacco of the intention or reasons for the cancellation nor give it a chance to answer or remedy the alleged breaches,” Muriithi said in her affidavit.

While revoking the licence, Mungai said the co-operative society no longer served its purpose.

“Inspection was ordered by this office under Section 60 and found that Ekeza Sacco Society had failed to meet its objectives,” read the notice number MR/4187405.

Order cancellation

"I order cancellation of the registration of the said society under Section 61(1). Any member of Ekeza Sacco Society aggrieved by this order may, within sixty (60) days from the date this order is published in the Kenya Gazette, appeal to the Cabinet Secretary responsible for Co-operative Development.”

The sacco's woes are linked to a Sh3 billion housing deal in Kamulu, Nairobi County, which involved 7,000 members.

To join the housing scheme, prospective home buyers were required to deposit a minimum of Sh10,000 as booking fees. They would then start saving with the sacco continuously under the scheme christened Gakuyo Zero Deposit (G zero D) programme.

Bishop David Ngari, chairman of the sacco and Gakuyo Real Estate Company, unsuccessfully ran for the Kiambu governorship in the last elections.