Ownership row rocks Harambee Sacco

By Michael Oriedo

A row is brewing over the ownership and management of some of the properties of the giant Harambee Sacco Society.

At the centre of the conflict that has spilt to Parliament are the officials of Harambee Sacco Society (HSS) and a splinter group calling itself Harambee Plaza Investment Housing Co-operative Society (HPIHCS).

The controversy which dates back to 2003 could see the activities of the over 90,000 member Sacco derailed and the institution lose ownership of the multi-million shilling Harambee Co-op Plaza situated at Haile Selassie Avenue and Uhuru Highway roundabout.

On contention is the ownership of the plot and the plaza plus the management of the building. HPIHCS, a group consisting of individuals some of who are members of the society, is laying claim to the land LR No. 209/9966 registered under Harambee Sacco.

According to documents in our possession, this tussle stemmed from recommendations of an inquiry appointed in 2000 by the then Commissioner of Co-operatives.

Led by Mr Sylvester Mwaliko, the team was supposed to look into the affairs of the Sacco, which was then in financial doldrums and come up with suggestions to improve service delivery.

Among the key proposals of the inquiry team was that "Harambee Plaza should be managed as a separate legal entity, preferably as a housing co-operative under an independent management committee and staff." And that Harambee Plaza shares should be separated from the society’s shares and the Sacco pays rent to the owners of the plaza.

"These suggestions were very noble. However, as a Sacco we noted that the team did not take into account that the plaza was built from a bank loan, which the society repaid and members did not contribute separately for the construction of the building," says Mr Macloud Malonza, the Sacco’s chairperson.

The inquiry team left the issue of ownership of the building in abeyance.

After the team’s conclusions, Malonza says some members of the Sacco who allocated themselves shares in the building formed a co-operative society, HPIHCS, in 2003 in anticipation they would take over the management of the plaza.

Right to own

"They expected that the recommendations would be implemented fully and they were to benefit at the expense of the society," he says.

These proposals were presented to the Sacco’s Annual Delegates Meeting (ADM) in 2007 and some of them were adopted.

However, among those rejected was the suggestion that the plaza be managed as a separate entity.

"Members felt setting up a separate management committee for the building would lead to increased costs and recommended it be run as one of the Sacco’s investments," says Malonza.

"They, too agreed that the Sacco buys back all individual shareholding in the plaza." This is because new members had also contributed in repaying the loan from Co-operative Bank that was used to construct the building. The Sacco has since bought majority shares in the building.

Despite the verdict, Malonza says HPIHCS pressed on with their demands. Documents in our possession show that the group claims the land, LR No. 209/9966 where the Sacco stands, was erroneously registered in the name of Harambee Co-operative.

Consequently, they want it transferred to HPIHCS. "The two combined plots situated at the junction of Uhuru Highway and Haile Selassie Avenue registered with one title deed LR No. 209/9966 be transferred to Harambee Plaza Investment Housing Co-operative Society Limited," a statement from the group reads.

When contacted, HPIHCS vice-chairman, Mr John Jogo said the plaza belongs to their shareholders and not the Sacco.

"The Sacco management through the ADM came up with resolutions to deny members a right to own the property," he said.

However, when pressed for more details, Jogo promised to prove his claims but he did not show up. Our calls to him later went unanswered.

Two weeks ago, an MP had prepared a question for the Minister for Co-operative Development and Marketing on whether he was aware officials of the Sacco were charged in court and are illegally in office. But Parliament adjourned for a retreat on the proposed Constitution.

"We are not illegally in office. In a case HPIHCS had filed against us, the Chief Magistrate observed that we could not be referred to as accused since we never took pleas," says Malonza. HPIHCS, under the tag Public Corruption, Ethics and Governance Watch Group (PCEG), once privately prosecuted officials of the Sacco in 2004 and demanded their interdiction on allegations of financial mismanagement.

Courts ruling

In the criminal case 45 of 2004, Nairobi Chief Magistrate W M Muiruri ruled that the case remain in abeyance pending the high court determination of a case in which the society had challenged the proceedings of the lower court.

The court declined to grant the interdiction orders because the accused did not take pleas in the case, so they could not be referred as accused persons. Merely having proceedings could not justify interdiction.

The Public Corruption, Ethics and Governance Watch did not reply to the High Court case Misc App 330 of 2005. It did not take off. Malonza says the tussle between the Sacco and HPIHCS could cripple the operations of the society.

"This matter has transformed into leadership struggles. Some of the people who lay claim to the building are not even members of the Sacco," he says. Commissioner for Co-operatives Fred Odhiambo says HPIHCS is not registered as a society under the ministry.

"When they presented their documents for registration, we discovered their share certificates and intentions were not genuine," he says. Mr Odhiambo says Harambee Sacco owns majority shares in the plaza, therefore, another group cannot register a new entity to take over the building.

"Sacco rules says if members want to invest, the can form a co-operative investment group and directly contribute towards the project, for instance, by taking loans," he says.

He observes that separation of the management of the building from the Sacco will increase efficiency but the decision has to come from members through their annual delegates meeting.

The row could bring down the Sacco, which is considered a symbol of success of the co-operative movement, says Malonza.