Despite the report coming out two years ago, the farmers claim no action has been taken to seal the loopholes. They further maintain that the society has been led in an opaque manner.
The October 14, 2020 report was released by Peter Mburu, Julia Kanyagoro, Josephat Munyao and Mary Wanjugu, who had been appointed by Nyeri Director of Cooperatives Development Peter Theuri.
Some of the issues raised by the report included lack of appended notes in the society’s budgets to explain and support the income and expenditure, and failure by the society to seek approvals from the commissioner while borrowing money, among others.
“The society does not provide the sub-county cooperative officer with all notices of the meetings. Once in a while, the office is invited for committee meetings. Minutes of the meetings are not forwarded to the officer’s office,” read part of the report.
The society’s assets register, the report revealed, did not show the value of assets, and annual returns for three years were yet to reach the commissioner.
According to the report, the society lacked a mandatory supervisory committee that is mandated to oversee its operations and compliance with legal and prudential standards.
The report indicated that an application of the society’s property funds should be done for members’ benefit.
The officials noted that by the time the Trade Department finished compiling the report, a schedule of the debtor members had not been made available, and an updated assets register had not been maintained.
“The society’s 17 factories reported a combined loss of over Sh1.8 million in the year 2018/2019, while the society’s dry coffee mill reported a Sh1.3 million deficit in 2018/2019 compared to Sh1 million in the previous year.”
Overall, the report indicated that the society posted a deficit of Sh8 million compared to Sh5 million the previous year.
The members claimed that despite the society having income-generating projects of up to Sh25 million, the money was never factored in their earnings nor paid as dividends.
“This is the money that has been misused by the management committee with endless trips, insurance premiums and endless meetings outside Nyeri County to justify awarding of hefty allowances,” the farmers, led by Paul Wanjohi, claimed.
They said that on July 6, 2020, the management committee spent Sh312,000 in a visit to the society’s investments in Nyeri town and in Nairobi, with each member going home with Sh26,000.
In November last year, the committee attended a four-day workshop in Nanyuki that cost the society Sh621,000 where each member was paid Sh15,000 allowance.
“The purpose of holding the workshop in Nanyuki was to justify that it was held outside Nyeri County so that they get more allowances. Had the same been held in Nyeri, they would pocket Sh3,000 allowance while the meeting would have cost Sh150,000 only,” the members said.
On April 15, 2020, the officials allegedly pocketed Sh26,000 for a total of Sh156,000 for another seminar in Nanyuki that never happened, the farmers alleged.
The director of cooperatives summoned the officials and ordered them to refund the money. But farmers say they should have been surcharged because that amounted to fraud.
The report showed how the management committee spent Sh3 million to build Kagunduini coffee collection centre, which was later condemned by the county engineer due to poor workmanship and failure to comply with construction rules.
In 2019, the management committee procured a Toyota pickup worth Sh3 million without floating a tender, the report showed.
Mr Wanjohi said that farmers although complained to the Trade Committee of the National Assembly, MPs’ promise to investigate their claims was yet to materialise.
“We want the relevant departments to institute an inquiry and surcharge all those who have embezzled our sweat,” Mr Wanjohi said.
Some of the monies farmers want the management committee to refund include the adjusted allowance from Sh5,000 to Sh8,000, which they say was increased without the authority of the general meeting.
They are also apprehensive that the management committee procured an insurance cover for themselves at an annual premium of Sh73,000 for each member. Although the cover was discontinued in 2020, farmers want their leaders to return the money, which they say should be used for society and not to advance the welfare of individuals.
But the society’s chairman James Gathua said in an interview that there was nothing wrong with the insurance cover and increased allowances.
“We meet on a need basis, and the issue of allowances was approved by the annual general meeting. Some of the issues addressed by the inspection report have since been addressed,” he told The Standard on phone.
Mr Gathu said the internal auditor had voluntarily stepped down after the report’s release, which was in line with the cooperatives regulations to replace the auditor every three years.
He defended the committee, saying the society was run in a transparent manner. He instead accused members of using embezzlement allegations to “settle an old grudge”.