- An audit has uncovered a massive fraud and embezzlement scheme at Metropolitan National Sacco, implicating former and current senior staff, as well as board members.
- The 47-year-old Sacco, originally Kiambu Teachers Sacco, lost approximately KSh 12 billion, leaving members concerned about their savings’ security.
- Key findings reveal fake loans, illegal withdrawals, dividend mismanagement, and overstated financials.
Origins of the Fraud
The fraud came to light three years ago when members began experiencing challenges withdrawing funds or accessing loans. In April 2022, the Commissioner for Co-operatives Development, David Obonyo, commissioned an audit that revealed the extent of the theft.
Audit Findings
Key irregularities include:
- Illegal Withdrawals: KSh 49 million stolen by a Nakuru branch teller.
- Fake Loans: KSh 7 billion issued to non-existent members.
- Dividend Mismanagement: Directors used members’ deposits to pay dividends instead of surplus funds.
- Inflated Balance Sheet: Overstated by KSh 14 billion.
- Employee Loans: Fraudulent loans totaling KSh 490 million issued to staff.
- Missing Cash: KSh 176.9 million vanished from branches in Kisumu, Thika, and Kiambu.
The scheme involved forgery, document falsification, and unauthorized account deductions.
History of Metropolitan National Sacco
Established in 1977 as Kiambu Teachers Sacco, it rebranded to Metropolitan Teachers Sacco and became Metropolitan National Sacco in 2009. It expanded from serving teachers and civil servants to salaried individuals, businesses, and minors.
However, only its Kiambu and Nairobi branches are profitable, while other branches and satellite offices struggle financially.
Government and Regulatory Action
The Senate Committee on Trade and Tourism, led by Okiya Omtatah, has urged the Teachers Service Commission (TSC) to stop remittances for members who’ve withdrawn. The committee plans to summon Cooperatives CS Simon Chelugui and TSC CEO Nancy Macharia over the missing funds.
Warnings from Regulators
The Sacco Societies Regulatory Authority (SASRA) has called for stricter internal controls to prevent insider fraud. Their Sacco Societies Fraud Investigation Unit (SSFIU) recommends thorough due diligence on employees and tighter monitoring of credit scores.
The Metropolitan National Sacco fraud highlights the urgent need for SACCOs to adopt robust governance practices to protect members’ savings. Investigations are ongoing, and stakeholders anticipate concrete actions to recover lost funds and hold perpetrators accountable
