Troubled Metropolitan Sacco has been declared insolvent. This was announced by the Commissioner for Co-operatives David Obonyo who said that the Sacco would require Sh7 billion to resume normal operations.
“Metropolitan Sacco is technically insolvent and that is a fact. The little amount that we were able to spot and outrightly felt was mismanaged was about Sh7 billion,” said Obonyo.
The insolvency declaration now means that the Sacco is unable to repay any money that it owes customers. Neither is the Sacco able to settle its financial obligations including paying bills.
In August 2024, the shocking extent of how billions of money were lost at the Sacco came to light. More than 100,000 Metropolitan Sacco members have lost Sh15 billion between 2021 and 2023.
“If the loan book was reported to be Sh17 billion and now we have Sh1 billion, it means the money that we are operating with today, the money with which we are giving services today is current money,” the board told Sacco members on August 15, 2024. “We are not refusing the responsibility that the Sacco owes members this huge figure. But we have to make the right decision for posterity.”
A probe that was ordered by the Commissioner of Co-operatives via the gazette Notice No 4558 in April 2022 unearthed damning findings. This probe found massive irregularities such as fictious dividend payments, irregular lending, and cooking of financial books.
In one instance, it was claimed that the interest income reported in the last 24 years, between 1987-2021 totaled Sh16.2 billion. However, the cumulative income for the same period was estimated at Sh6.8 billion, resulting in a variance of Sh9.4 billion.
The fake dividends were paid out of the Metropolitan Sacco members savings. In one of the suspicious transactions that were busted, there was an overstatement of the Sacco’s premier loan facility by an excess of Sh7 billion due to suspected disbursements to fictitious members.
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At the same time, the management of the Sacco was unable to explain why the Sacco’s cumulative assets were stated as Sh28 billion yet external auditors had established that they were around Sh14 billion.
The management had gone on to hoodwink members with false dividend payments despite non-existent surplus reserves from which such disbursements were made.
The management of the Sacco was also accused of having disbursed loans amounting to Sh490 million to its employees. In addition, Sh176.9 belonging to the Sacco’s branches in Kisumu, Kiambu and Thika branches was allegedly lost!
