Parliament seeks audit answers on Sh60bn unclaimed assets held by State agency

Parliament has been petitioned to launch an investigation into billions of shillings' worth of unclaimed assets held by the State following years of rising concerns over the reunification of the assets with their rightful beneficiaries.

Nominated Senator Gloria Orwoba alleged on the floor of the Senate last week that about Sh10 billion worth of unclaimed assets belonging to the dead could have been misappropriated including about Sh500 million in what she termed as questionable auditing fees which cannot be accounted for.

The Unclaimed Financial Assets Authority (UFAA) - the agency mandated to reunify billions of unclaimed assets - has been sitting on billions in idle cash, shares and dividends.

It has however been struggling to reconcile the growing haul to its legitimate owners according to recent State-backed Auditor General reports.

Last year (2023) the unclaimed financial assets authority that is headed by chief executive officer John Mwangi disclosed that it is holding over Sh60 billion of unclaimed assets.

Considering that the 50 km Thika Superhighway cost taxpayers Sh32 billion, the Sh60 billion can deliver two such projects, underlining the massiveness of the unclaimed assets.

The unclaimed assets can also fund 75 per cent of the construction of the Nairobi Expressway, which links Westlands to Jomo Kenyatta International Airport (JKIA).

The unclaimed assets comprise Sh33 billion in cash and cash equivalents, as well as 1.7 billion shares amounting to Sh30 billion.

Reporting and surrender of unclaimed financial assets by all holders is mandatory and is due on or before November 1 every year. Holders are also encouraged to file nil returns if applicable.

The money is largely held by insurance companies, banks, pension schemes, law firms, mobile phone money wallets and Saccos, among others.

"The sad thing about this is that this is money that has been left by those who have passed on. It is literally dancing on the graves of dead people," said Senator Orwoba.

The law allows the UFAA to charge any entity including banks or Saccos that fails to surrender unclaimed assets a penalty equivalent to 25 per cent of the assets held.

Besides, the authority levies a penalty of between Sh7,000 and Sh50,000 for each day that the assets stayed before being submitted.

The law requires the holding company to search for the rightful owners of an asset before declaring it unclaimed and forwarding it to the Ufaa.

"When we have a state agency that is operating in the sums of billions that cannot account for this money, money that is potentially being looted. The same agency cannot account for Sh500 million that they claim they have spent on auditing services," said Orwoba.

"Unclaimed Financial Assets Authority have discrepancies of up to Sh10 billion," she stated.

The authority which started operations in 2014 is mandated to receive unclaimed assets from the holders of such assets, safeguard and reunite the assets with their rightful owners.

"If we are going to be prudent in terms of austerity measures, it is proper as we are looking at our expenditure in terms of money spent even here in the senate we should also ensure these state agencies, one of them being UFAA be really audited to the point we can look at the extra resources this country has and how we can diversify or use those resources to help us in running the economy of this country," said Orwoba.

UFAA chairman Kigo Njenga and the CEO John Mwangi did not respond to numerous Standard queries over the alleged audit queries. Mr Njenga is a former Gatundu North Member of Parliament and a former Finance Executive in Kiambu County. Mr Mwangi is set to leave office by end of this year when his term comes to an end.

Ms Orwoba's concerns over the operations of UFAA come as Auditor General Nancy Gathungu recently raised a similar red flag over the security of unclaimed assets.

While the Authority started receiving unclaimed assets from holders in 2014, reunification of the assets with the beneficiaries started in 2016.

As of June 2022, receipts from holders were Sh22,614,997,000 while claims paid totaled to Sh604.9 million representing a reunification rate of a nearly three percent of total assets remitted by holders such as banks according to a report by the Auditor General for the financial year ended June 30 2022.

According to Auditor General Nancy Gathungu, the Authority is not meeting its mandate of tracing unclaimed assets and reunifying them with the beneficiaries in an efficient and effective manner.

Most of the unclaimed assets are attributed to the failure of the deceased to inform the beneficiaries of the assets besides the absence of a will.

Wealthy Kenyans are also said to shy away from claiming money in idle assets surrendered to the state.

A big chunk of the money (60 per cent), Ufaa data released earlier showed, included deposits and cash in dormant current and savings accounts from financial institutions, especially commercial banks.

UFAA Chief Executive John Mwangi said earlier there is about Sh2 billion in uncollected mobile money funds, including Mpesa.

Ufaa has in the past put the names of hundreds of beneficiaries on its websites for their relatives and next of kin to query and file for claims.

Billionaire business owners, former powerful government officials and prominent politicians are among the individuals on the list.

The families of former Prime Minister Raila Odinga and former Cabinet Minister Njenga Karume are among Kenyans who had earlier failed to claim assets running into billions of shillings held by the State.

UFAA earlier revealed that the two families had not claimed millions of cash belonging to the late Odinga's son Fidel Castro and the former Kibaki-era politician.

The State agency at the time urged the two wealthy families to claim the cash, which it termed "substantial."

According to Transparency International Kenya is perceived as one of the world's most corrupt countries with bad governance and corruption of public funds robbing Kenya of Sh270 billion, amounting to 25 percent to 30 percent of the government's annual budget every year.

"This does great damage to the country's economic development and depletes the country's funds available to spend on public projects, according to the report dubbed 'illicit financial flows in Kenya' that was released last year (2023).

The report notes that corrupt government officials often make use of a network of proxies and shell companies to launder their money overseas, with sectors that often receive the largest government allocations every budget cycle -education, health, and security- witnessing the largest corruption scandals.