How Sh360.5m was siphoned from Afya Sacco

New findings show how the giant society's board siphoned huge cash from the entity through monthly allowance and numerous meetings, forcing the regulator to step in to protect members' contributions. The findings are detailed in a letter that sanctioned the Afya Sacco Society Ltd management. The letter by the Sacco Society Regulatory Authority (Sasra) shows Afya Sacco's board was holding more meetings and had standard monthly payments, disguised as allowances, running into millions of shillings. Usually, allowances are paid only when board or committee members meet. However, the authority reveals that Afya Sacco Society Ltd had been operating without a compensation policy that should guide payments to board members. Hence, the letter by Sasra Chief Executive Peter Njuguna shows the sacco's board members were receiving monthly payments, leading to questionable Sh360.51 million payments that the authority is probing. "That, the sacco society shall immediately suspend the standard monthly payments to the members of the board and or supervisory committee purported to be allowances or compensation," reads the letter dated October 31, 2024, addressed to the sacco's chief executive and board of directors. It adds: "...no allowances or other compensation shall be made to the members of the board and or supervisory committee and or management, unless and until the Sacco Society has developed a board of directors compensation policy..." The authority further limited the number of meetings the board can have to 12. "Henceforth, all meetings of the full board shall be strictly limited to not exceeding 12 per annum (excluding the four quarterly joint meetings with the supervisory committee) as prescribed in the Regulations, 2010," the letter directs. The meeting of any committee of the board as constituted by the sacco's bylaws shall be limited to not more than one per month. Sasra further ordered the sacco to submit a schedule of the meetings. "The board of directors, the committees of the board of directors, and the supervisory committee shall each develop and cause to be submitted to the authority within the next 15 days from the date herein," the letter says. Heightened surveillance The submission should include a calendar of meetings for the remainder of the year (2024) and a schedule for 2025. Each meeting should have a proposed agenda. "And thereafter no meetings shall whatsoever be held outside the calendar of meetings unless otherwise approved in writing by the authority," the letter adds. The letter placed the sacco under heightened surveillance as it issued cease and desist orders that saw the cash office shut. "The board of directors and the management of the sacco society, and every officer thereof shall cause the immediate closure of the cash office operated at the sacco society, and shall cease and desist from undertaking any further cash transactions," the authority ordered. In the letter, Sasra questions payments amounting to Sh360.51 million made between February 2022 and August 2024 in cash, a huge chunk of them being allowances for meetings. Sasra asked the sacco to submit a detailed report providing an account of the amount. "The chief executive officer of the sacco society and the internal auditor, shall within the next three months from the date herein, prepare and submit to the authority without fail a detailed report providing account of the sum of Sh360.51 million, which were paid out in cash from the sacco society's cash office between February 2022 and August 2024, using various payment vouchers, but without any evidence of accounting for the manner in which the said cash payments were utilised by the people to whom the payments were made," the letter says. These amounts include a general imprest amounting to Sh48.3 million, committee sitting allowance Sh35.2 million and Sh66.0 million that was spent over the period for member education. The board also received Sh25.9 million over the period as transport allowance, Sh18.3 million as sitting allowance, Sh3.9 million for vetting committee allowance and Sh596,600 for supervisory allowance. There is also Sh10.7 million that was paid for extra hours worked and a branch imprest of Sh4.5 million. "Henceforth, any compensation on account of transport reimbursement in the course of discharging lawful duties for the benefit of the sacco society (where no official transportation is provided) to the members of the board of directors, supervisory committee or delegates outside Nairobi County, shall be strictly based on Automobile Association of Kenya standard rates," the authority directs. "No payments or allowances shall be made to any delegate and or branch officials of the sacco society, unless on account of transport reimbursement for lawful duties undertaken or done on behalf of the sacco society." Sasra, in the letter, provided the modalities in which the irregular or unprocedural amounts will be recovered. A member of the board of directors will pay Sh67,515 monthly, and a member of the supervisory committee will pay Sh52,500. This is done monthly to reflect the February 2022 to October 31, 2024.

How Sh360.5m was siphoned from Afya Sacco

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How Sh360.5m was siphoned from Afya Sacco

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