Cash held as Kenyans die in poverty

By Elizabeth Mwai and Jackson Omondi

Over Sh4 billion worth of inheritance wealth is being held by the Kenya Government’s Public Trustees department at the Attorney General’s Office, with the list of beneficiaries growing daily.

This is in addition to the Sh119.7 million that is yet to be recovered from collapsed banking institutions.

Investigation by Financial Journal has also established that unclaimed assets worth millions of shillings is, meanwhile, piling up monthly at the department of State Law office as widows, widowers and orphans struggle with bureaucratic delays, to access their inheritance, some of the cases dating back to more than 95 years.

"On average, we close about 4,500 case files annually and give the respective heirs their money together with accrued interest as per the prevailing treasury bill rate," Mrs Eunice Sawe, Public Trustee Kenya told Financial Journal.

Administrator-of-last-resort

This figure is in addition to 5,000 new unclaimed files received by the public trustee each year, translating into an overload of 500 new files, wealth that is held unclaimed in the public trustee’s Investment Account. In such situations, the public trustee is the administrator-of-last-resort.

The Public Trustees Office is estimated to be holding over 45,000 pending files yet to be closed due to disputes, lack of identifiable heirs to the said estate or lost documents that hamper release of assets beneficiaries.

Cash held at the Public Trustee Account is usually invested in securities market, mostly short-term treasury bills and bonds.

"When an heir comes to claim the estate, they will always be paid all they are owed together with interest that has accrued as at the time of the settlement," said Mrs Sawe.

Interestingly, other monies that have accrued interest while the estate was being administered by the public trustee remain with the department’s investment account.

Sawe attributes the long period it takes to pay beneficiaries their inheritance cash to the strict legal process that has been put in place, to safeguard against making payments to the wrong persons.

Administrator

For instance, one is required to have a letter from the District Commissioner identifying the person as an heir and a court order authorising the person to become the administrator of the said assets.

"The Public Trustee’s office is not a money dispensing machine like the ATM. There are legal procedures that need to be followed," says Sawe.

In the event of delays in handing over administration of the estate, the department can use its discretion to give cash advances to the affected heirs in cases of emergencies, as spelt out in the Public Trustees Act.

While procedures for accessing inheritance wealth in Kenya is clear, the line up of individuals waiting to obtain administration of their inheritance from the state law office, is growing by the day.

" I have been camping at the trustee corridors for release of my monies and this has not been forthcoming," said one individual who has been waiting for over 30 years to have her inheritance.

"My grandmother queued here begging for this money until she died. Now I am also queuing and hoping that I can get what rightfully belongs to me before I die for the sake of my children," said a widow.

"There is an unclaimed assets bill that is supposed to come before Parliament for discussion. This legislation will take away all unclaimed assets from holding institutions to a single agency," said Joe Ngigi, Chief Executive of Unclaimed Property Assets Register (UPAR).

Single trust fund

He proposes that all unclaimed assets should be channelled to a single trust fund, with a different entity responsible for investing the funds while another traces the heirs.

"We need to shift resources being held by the public trustee’s office to independent private sector service providers," said Ngigi.

Currently, the Public Trustee’s office does not publish any public financial reports, thereby raising accountability and transparency issues.

"While there is no policy on how unclaimed assets are managed, we hope that the proposed bill will establish an agency that can receive these resources from holding institutions like banks, insurance, companies, public trustees, pensions and even caution money in schools," said Vincent Kimosop, Director, Institute of Legislative Affairs (ILA), Nairobi.

It has also been proposed that a statutory limitation of seven years be imposed before one can take a holding entity to court.

If no claim is made, the said estate can be transferred to an agency to manage and seek for beneficiaries in a period not exceeding 15 years.

"Thereafter, ownership of all the unclaimed assets can revert to the state, as is the practice in countries with more effective inheritance law," said Kimosop.

This will, however, deal a big blow to beneficiaries currently camping at the Trustee corridors waiting for the release their benefits because it will block small advances during emergencies.

Low level disclosures

Kimosop adds that at the moment, there is a lot of malpractice and low levels of disclosures by holding institutions, largely due to lack of effective legislation on management and disbursement of unclaimed assets.

Wealthy individuals, who pass on without writing a will, make matters worse for heirs to the estates left behind.

"There are files dating back to the 1950’s that are still open because of running disputes involving family members all fighting to become heirs," said Sawe.

Investigations by FJ reveals that the office of The Public Trustee has a file that dates back to 1916, which is yet to be closed. This is in addition to other old files dating back to the 60’s and 70s.

This pile up is blamed on lack of skilled staff, poor attitude of employees, bureaucracy and poor follow ups by those affected.

In some instances, the public trustee has been accused of mismanaging estates under its care, with some matters ending up in long court battles.

Last year, the State Law office put out an advertisement asking those related to persons they had listed as deceased, to report to their offices.

"While the inheritance and succession system is still complicated, there are fears that making it simpler could create loopholes, limiting the trustee’s ability to identify the rightful heirs", said Onesmus Mutua, Senior Deputy Secretary at the State Law office.

He suggests that Kenyans begin writing wills to sort out the problem of inheritance. "Please write your Will. Even the richest people in this country do not and this is a big problem," said Mutua.