The fraud case facing the Controller of Budget (CoB) Margret Nyakang’o stems from a civil case at the Mombasa Court, but risks ending her illustrious stint at the helm of the powerful constitution office.
In the civil case, businesswoman Claudia Mutungi Mueni sued Fountain Enterprise Program (FEP) Sacco Limited and its directors to recover Sh29 million and interest accrued since December 2, 2019.
Dr Nyakang’o was not mentioned in the civil matter, but in the criminal case yesterday the prosecution listed her as one of the 11 directors of FEP Sacco.
Others listed in the case are Dr Jackson Ngure Wanjau, Susan Kendi Kiambata, James Makena Wanyangi, John Muchira Kithaka, Jane Karuu Ndayi, Muthoni Eliphas and Joan Chumo Kangogo.
In the civil case, Mutungi said she held a long-term fixed account at the Kenya Women Micro-Finance Bank (KWFT). Kiambati, who used to manage Mutungi’s account, moved to FEP Sacco Society Limited.
While at FEP, Mutungi claims that Kiambati persuaded her to transfer her Sh29 million to FEP, saying it offered a higher interest rate for fixed deposits.
“On the strength of her advice, on December 2, 2019, I transferred Sh29 million from KWFT to FEP Sacco’s account at KCB, Koinange Street, Nairobi,” she says.
To sweeten the deal, FEP Sacco, upon receipt of the funds, on December 3, 2020, paid Mutungi an anticipated interest amounting to Sh1,136,438.00.
“She stated that at the time of transferring the money, she did not apply or required to be a member of the 1st defendant,” Justice Njoki Mwangi quoted Mutungi in the judgement delivered on March 9, 2021.
In the court proceedings, the bone of contention was whether Mutungi ever became a shareholder in FEP or was just a client who banked the money to accrue interest.
In the ruling, Justice Mwangi appeared to agree with FEP that the court lacked jurisdiction to hear and determine a dispute on shareholdings of an entity.
“In the said circumstances, I down my tools for the dispute herein to be heard by the Co-operative Societies Tribunal under the provisions of Section 81 of the Cooperative Societies Act.
“The defendants’ preliminary objection that this court lacks jurisdiction to hear this case is upheld,” said Justice Mwangi.
In its defense, FEP produced a membership form it claimed Mutungi signed on November 5, 2020.
And now, the prosecution claims that Wanja, Nyakang’o co-accused, forged the form.
“Dr Jackson Ngure Wanjau, on November 5, 2020, Mombasa Law Courts forged FEP Sacco society limited membership application form to the registrar, High Court Kenya, Mombasa civil/commercial division purporting to be signed by Claudia Mueni Mutungi,” states the charge.
Mutungi said in her statement in the civil case that she never signed the form and the signature was a forgery.
“She (Mutungi) stated that at the time of transferring the said money she did not apply and she was not required to be a member of FEP,” said Justice Mwangi.
It is documented in court that on February 28, 2020, Mutungi notified FEP that she needed her money to be placed in a call account for a month after its maturity on March 3, 2020.
This is after FEP tabled the alleged forged letter in court on March 31, 2020, claiming that Mutungi had written to withdraw membership.
FEP claimed that on April 6, 2020, it gave Mutungi a form for allegedly withdrawing from membership and requesting the withdrawal of Sh20 million.
Mutungi wrote on June 4, 2020, asking for her money, but FEP replied, saying this could only take effect from July 5, 2020.
In an earlier interview before the matter went to court, Nyakang’o told The Standard that she was also a victim of FEP’s fraud.
On December 3, 2020, a day before she was sworn in as the CoB, Nyakang’o’s name appeared in the Registrar of Companies as one of the directors of FEP.
Nyakang’o told The Standard last month that she bought shares worth Sh500,000 almost a year before she was interviewed for the post.
“I’m a victim. I was never refunded my Sh500,000. This is something I tried when I was hustling but I could not risk a well-paying job at the CoB because of FEP,” said the CoB.
Yesterday, Mutungi told The Standard that she had appealed against the High Court’s decision to refer the case to the tribunal.
We established that FEP and Mutungi were in talks to settle the issue out of court. Mutungi said yesterday that she was shocked by the turn of events given the emissaries had assured to pay before the end of this week.
“I’m actually shocked that she was arrested and charged. When I heard that she is being arraigned I thought it was on a different matter because my issue was almost concluded,” said Mutungi.