Members of Parliament want to open an investigation into how auditing firm Ernst & Young (EY) handled the financial statements of troubled Spire Bank before the lender was bought by the giant teachers’ savings society, Mwalimu National Sacco.
The National Assembly Departmental Committee on Finance and National Planning has also questioned the recent deal which saw Equity Bank buy the troubled lender “for a song”.
The MPs want EY - one of the ‘Big Four’ auditing giants in the country - investigated to establish whether it gave a true picture of the financial health of Spire Bank ahead of its purchase by Mwalimu Sacco over six years ago.
“This committee should recommend serious investigations into those who were involved in the acquisition of the bank by Mwalimu Sacco, including the transactional advisors,” said Ainamoi MP Benjamin Lang’at, the vice chairman of the committee.
Amidst persisting concerns about the bank’s health, Mwalimu Sacco executives pushed on with the controversial deal.
They bought 75 per cent of the bank for Sh2.4 billion in 2015 and later the remaining 25 per cent in November 2020.
The Co-operative Alliance of Kenya, an umbrella of more than 14 million members of the co-operative movement, had before the deal flagged the transaction on grounds that due process was not followed.
That was before EY, in a probe commissioned by Mwalimu Sacco, ahead of the acquisition, also raised its reservations on the deal. MPs yesterday questioned whether EY provided the Sacco with the necessary guidance.
They also called on investigative agencies to question all officials involved in the 2015 sale deal, which they alleged was rushed and left teachers with a bleeding bank.
The impending probe on EY adds to a growing list of audit firms under scrutiny for their alleged role in firms that have been found to have accounting irregularities.
Spire Bank’s accumulated losses of up to Sh9 billion have wiped out shareholder funds.
The National Assembly committee is also questioning the latest sale of Spire Bank to Equity. Committee chairman and Molo MP Kimani Kuria said the deal risks endangering the teachers’ investments in Mwalimu Sacco just like previous controversial deals.