Ex-Kenya Railways staff up fight over multi-million investment

A section of former Kenya Railways Corporation (KRC) employees is embroiled in a vicious fight over a multi-million investment located at Nairobi Central Business District (CBD).

The retirees, majority in their sunset days, are members of the troubled Relisa Housing Cooperative Society and are in a tug-of-war with the management. They want to stop the sale of the building.

The building sits on a 0.1696-acre plot on Mfangano Street, Nairobi.

It is a six-storey building with 74 units, with the first-floor housing shopping and exhibitions malls.

The cooperative society acquired the prime property 36 years ago at a cost of Sh11.5 million but some aggrieved members have been up in arms over meagre dividends since 'they don't believe is a true representation of profit acquired from the building."

Led by members' chairperson James Machira, the senior citizens have also accused the management of failing to conduct the Annual General Meeting (AGM) since 1999, and failing to relinquish their positions to allow new blood to manage the cooperative.

"From 1999 to 2005 we received an annual dividend of Sh90 while from 2005 to 2012 we received Sh200. From 2013 to 2018, we got Sh300 and Sh400 to date and not all members receive it since some can't travel to Nairobi," Machira told the Cooperative Tribunal in court documents.

Poor dividends

The claimants maintained that the building fetched over Sh20 million annually which should translate to more earnings. They accused the management of failing to review their members' register from 12,000 to 5,000 members claiming a good number of them had withdrawn due to poor dividends.

Machira's team has engaged the management team led by the Cooperative chairperson Michael Sande in both tribunal and the Department of Cooperatives seeking to dislodge the officials for failing to prepare and present audited accounts.

In tribunal case number 35 of 2017 between Machira and 2,955 others versus Relisa Housing Cooperative Society, the members also wanted the tribunal to dissolve Sacco over mismanagement.

But the tribunal struck out the petition citing a lack of jurisdiction to compel the officials to produce books of accounts and the dissolution of the cooperative, noting those were the functions of the Commissioner of Cooperatives.

"Powers and jurisdictions to compel officials of a cooperative society to produce books of account or to account for the affairs of the society squarely lie in the office of the Commissioner of Cooperatives as stipulated by Section 26 of the Cooperatives Act," the tribunal judgement read.

In August 2017, the Commissioner of Cooperatives Mary Mungai wrote to the sacco management directing them to call a meeting to either discuss the rejuvenation or liquidation of the sacco.

"Liquidating or selling the property will require a resolution by a two-thirds majority of members and the implication is that members will get their rightful share. On rejuvenation, members will have to change bylaws to suit new emerging situations and propose periodic valuation of property," Mungai said.

She said since the sacco had transferred the ownership of the property to individual members leading to the formation of the housing cooperative, there was little evidence to demonstrate the growth of the society.

"Grassroots elections held every year to elect delegates and the management committee are likely to be misrepresentations of the member's wishes since the role of management committee appears to be limited to managing the facility," she noted in the letter.

The management through Managing Director Stephen Oduol said they adhered to the Commissioner's directive in 2019 but Machira's team lost the vote to the wishes of the majority.

On October 7, 2019, the aggrieved members wrote to the Commissioner of Cooperatives informing them that the society had 5,000 as opposed to 12,000 members.

They also asked the commissioner to carry out an audit of the members' files to ascertain the actual members.

"They have been acquiring loans using the building as a collateral without consulting members to venture into buying land parcels with a view of selling and sub-dividing them to expand society activities," read part of the letter sent to the Commissioner of Cooperatives.

New audit

On September 24, 2021, the Commissioner of Cooperatives, at the request of the disgruntled members ordered an audit into the affairs of the Sacco. After the inquiry, the members wrote to the Commissioner again claiming the team dispatched to carry out an audit came up with different issues other than what they had presented.

"We had been pushing for census of members, removal of the management over mismanagement and we seek the review of the valuation of the building which has been valued at Sh300 million while we understand its value could be over Sh5 billion," the letter read.

They claimed that the management had defaulted land rate payments accruing a total of Sh472,165 as of February this year.

However, Oduol dismissed the allegations, noting that the valuation of the building was done by competent valuers.