Thousands of members of the troubled Moi University Cooperative have lost their entire life savings to mismanagement.
All that is left of the fallen giant Sacco are two buildings worth a total Sh800 million.
One of the commercial buildings, the bigger Musco Towers in Eldoret town, goes under the hammer this morning amid protests from Sacco members.
The Cooperative Bank has instructed liquidators to sell the building to recover some Sh500 million that was borrowed to put up the towers.
The second building, also in Eldoret town, has been valued at less than Sh300 million. It is also under the threat of auctioneers.
The contractor hired to put up the building has never been paid years after he completed works.
Interviews with various officials involved in the liquidation have confirmed that the Sacco is irredeemable since its accounts are dry.
“There is no money in the Sacco accounts. However, we have been able to push the university to pay members Sh44 million that had been deducted from staff but not remitted,” said an official.
Another Sh26.8 million, which the University of Nairobi owed the Sacco, has been recovered, but swallowed by debts.
Funds that were ultimately remitted by Moi University were used to compensate front office customers who held deposits in the institution. “We could not even settle the entire amount claimed by the depositors; they only got a portion of their deposits,” the official said.
Being a deposit-taking entity, it was allowed to operate customer accounts pretty much like a commercial bank.
That is how some 6,000 customers who were not necessarily members of the Sacco found themselves entangled in the mess.
An inquiry ordered by the Commissioner of Cooperatives found a Sh4 billion hole in Musco’s books, being the difference between the value of all assets and liabilities.
Past directors and managers were found to have siphoned billions of shillings from the workers’ savings kitty, but might go unpunished. The money may not also be recovered because it ceased to exist as a legal entity as soon as its licence was withdrawn.
Booked as liabilities
Member savings are booked as liabilities. They can only be recovered after ordinary creditors, in this case Cooperative Bank and the contractor, have been paid.
Being that the assets are insufficient to settle the liabilities, the Sacco was declared insolvent last year and subsequently de-registered.
As it stands today, Musco does not exist as a legal entity. As such, members do not have a legal claim in the institution they entrusted with their savings.
Recoveries from any outstanding loans are channelled to repaying other smaller creditors, under the supervision of the liquidator.