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Rafiki Microfinance in fresh crisis amid internal fall out – The Informer

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A deep pocketed investor is mulling walking away from a possible takeover of scandal hit Rafiki Microfinance bank which is under the management of Kenya’s deposit insurer, the Kenya Deposit Insurance Corporation (KDIC) amid internal management wrangling at the bank pitting rival camps, The Informer has established.

Those close to the foreign investors say the investors are likely to end possible buyout plans after reports of internal fighting and possible cover up of financial mismanagement by new management at the loss making micro-financier.

Rafiki -the third largest microfinance institution in Kenya – is currently over-sighted by KDIC which is headed by KDIC chief executive Mohamud Ahmed as the company hunts for a strategic investor to buy out the Chase bank shareholding.

The fights are likely to attract the eye of Central Bank of Kenya (CBK) investigators which has been keen on reining in possible bank collapses, after the fall of Chase Bank, The Informer has learnt.

The troubled Rafiki, which was owned by the collapsed Chase Bank, is in the middle of a transition and is seeking to recruit a chief executive officer (CEO) to replace its former Managing Director Ken Obimbo who recently left the post.

Obimbo who has been CEO since 2015 exited the company in March this year in controversial circumstances after a near six year stint.

Obimbo took over from Daniel Mavindu currently serving as the lender’s chairman.

Rafiki is working with an executive headhunter on the CEO search.

“The CEO will be expected to provide effective strategic leadership and direction to the management team with a view to accomplish the mandate of the bank,” said the firm involved in the search in a notice published in newspapers on April 16.

“Minimum qualifications (include) at least ten years of direct experience in financial services, seven of which should have been in top management positions in a Microfinance bank or similar environment.”

Ahead of the expected corner office hiring Rafiki has tapped its Chief Finance Officer (CFO) Paul Karanja Macharia to the helm of the CEO post in acting capacity.

Macharia has previously worked at Equity Bank and Chase Bank (Finance Departments) and was a Finance Manager at Chase Bank before joining Rafiki in 2016.

The roles were on the spotlight after the collapse of Chase Bank.

He will be acting CEO from 1st April 2021 for 90 days as the search for a substantive CEO is undertaken.

Amid the search for new CEO, the microfinancier is recording a string of high profile exits.

Insiders contend that Macharia has a reputation for bullying and harassing staff who approach him for approvals and is widely feared.

Macharia’s appointment has compounded the internal wrangling as employees form different camps to defend their roles.

“He enjoys being feared and mistreats staff in Finance Department leading to high number of staff exit in the department.” Another source intimated.

Under his brief role, the bank has been hit by high profile exits. Some say he has targeted non-Kikuyu staff at the bank in what raises the specter of possible tribalism at the micro-financier.

Among those who have faced the purge include former long serving Head of Marketing and Corporate Affairs Zak Syengo who is among the senior executives who have left the company in recent weeks under Macharia’s brief reign.

Syengo who is a close ally of the current chairman Daniel Mavindu and a former Strathmore alumni has resigned but is serving notice pending his exit.

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Mavindu is a well-connected business man who still has vast interests in the lender does not see eye to eye with the acting CEO.

It is alleged it is on this basis that the acting CEO Macharia has initiated a purge of senior level managers deemed not to be in his camp.

Other high profile exits include that of Derrick Lwatati who was the General Manager – Business Development.

Lwatati has been moved by Macharia to Rafiki Homes (a subsidiary of Rafiki dealing with development and sale of properties) as General Manager.

The move is widely viewed as a demotion considering the standing of the two companies and Rafiki homes not yet being operational and a continuation of the purge of non-Kikuyus.

Other high profile exits by Heads of Departments (HoDs) are expected at the bank in the near future.

At the centre of the mass exits are allegations that staff including HODs are being intimidated by the Acting MD and are fearing for their jobs.

Prevailing atmosphere among staff, The Informer, understands is that of fear and uncertainty staff are going through work motions just to protect their jobs.

HOD’s are said to be targeted and victimised and anyone deemed not to be in the CFO/ Acting MD’s camp is targeted for elimination.

Our investigations have established that the Head of Credit is on suspension, Head of Marketing has resigned, about 3 or 4 other HOD’s are already being targeted for suspension.

“The CFO/Acting MD is unprofessional and on a wide scale witch-hunt campaign. How many more staff must undergo this kind of injustice,” says part of a petition being filed for presentation to the National Assembly by workers.

“If this injustice is happening to senior managers then what is to expected to happen to the rank and file will this not adversely affect productivity,” adds the petition which is to be copied to KDIC, CBK and other regulators.

Workers have asked the CBK, KDIC, and the Rafiki Board that is led by Mavindu to address the complaints before it’s too late.

“How is the Board correcting these irregularities, are staff safe to air views contrary to those of the CFO/ Acting MD without fear of victimization,” says the petition.

The disputes have raised concerns among investors seeing that Rafiki’s parent company collapsed under duress.

Rafiki Microfinance Bank was a subsidiary of Chase Bank and launched its operations in the Kenyan market in 2011 targeting the microfinance industry.

Chase Bank was placed under receivership on April 7, 2016 following a run on deposits after reports of liquidity problems spread online.

Chase Bank was re-opened on April 27, 2016 under the management of the Kenya Deposit Insurance Corporation (KDIC).

Mauritian lender SBM Bank in 2018 carved out and bought 75 per cent of certain assets and liabilities from Chase Bank in what was considered as cherry-picking ‘good assets.’

Rafiki was a subsidiary of Chase bank but was not bought by SBM.

Rafiki has 19 branches spread across 11 counties in Kenya.

The fights have threatened to derail multibillion ongoing programs by the lender.

Jubilee Insurance in 2015 inked a bancassurance deal with Rafiki Microfinance Bank to distribute life insurance products in a bid to further boost its presence in the country.

Jubilee Insurance CEO Patrick Tumbo said then the partnership with Rafiki will help in improving access to life insurance products among Kenyans.

“This partnership will enable Rafiki Microfinance Bank customers to access our life products with ease from their banker across the country,” Tumbo added then.

Germany’s insurance and asset management firm Allianz which serves more than 100 million retail and corporate customers in more than 70 countries worldwide recently completed the acquisition of 66 percent stake (1,522,622 ordinary shares) in Jubilee General Insurance Company (Kenya), leaving the holding company (JHL) with 34 percent of the shares.

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Sordid tale of the bank ‘that would bribe God’

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Bank of Credit and Commerce International. August 1991. [File, Standard]

“This bank would bribe God.” These words of a former employee of the disgraced Bank of Credit and Commerce International (BCCI) sum up one of the most rotten global financial institutions.
BCCI pitched itself as a top bank for the Third World, but its spectacular collapse would reveal a web of transnational corruption and a playground for dictators, drug lords and terrorists.
It was one of the largest banks cutting across 69 countries and its aftermath would cause despair to innocent depositors, including Kenyans.
BCCI, which had $20 billion (Sh2.1 trillion in today’s exchange rate) assets globally, was revealed to have lost more than its entire capital.
The bank was founded in 1972 by the crafty Pakistani banker Agha Hasan Abedi.
He was loved in his homeland for his charitable acts but would go on to break every rule known to God and man.
In 1991, the Bank of England (BoE) froze its assets, citing large-scale fraud running for several years. This would see the bank cease operations in multiple countries. The Luxembourg-based BCCI was 77 per cent owned by the Gulf Emirate of Abu Dhabi.  
BoE investigations had unearthed laundering of drugs money, terrorism financing and the bank boasted of having high-profile customers such as Panama’s former strongman Manual Noriega as customers.
The Standard, quoting “highly placed” sources reported that Abu Dhabi ruler Sheikh Zayed Sultan would act as guarantor to protect the savings of Kenyan depositors.
The bank had five branches countrywide and panic had gripped depositors on the state of their money.
Central Bank of Kenya (CBK) would then move to appoint a manager to oversee the operations of the BCCI operations in Kenya.
It sent statements assuring depositors that their money was safe.
The Standard reported that the Sheikh would be approaching the Kenyan and other regional subsidiaries of the bank to urge them to maintain operations and assure them of his personal support.
It was said that contact between CBK and Abu Dhabi was “likely.”
This came as the British Ambassador to the UAE Graham Burton implored the gulf state to help compensate Britons, and the Indian government also took similar steps.
The collapse of BCCI was, however, not expect to badly hit the Kenyan banking system. This was during the sleazy 1990s when Kenya’s banking system was badly tested. It was the era of high graft and “political banks,” where the institutions fraudulently lent to firms belonging or connected to politicians, who were sometimes also shareholders.
And even though the impact was expected to be minimal, it was projected that a significant number of depositors would transfer funds from Asian and Arab banks to other local institutions.
“Confidence in Arab banking has taken a serious knock,” the “highly placed” source told The Standard.
BCCI didn’t go down without a fight. It accused the British government of a conspiracy to bring down the Pakistani-run bank.  The Sheikh was said to be furious and would later engage in a protracted legal battle with the British.
“It looks to us like a Western plot to eliminate a successful Muslim-run Third World Bank. We know that it often acted unethically. But that is no excuse for putting it out of business, especially as the Sultan of Abu Dhabi had agreed to a restructuring plan,” said a spokesperson for British Asians.
A CBK statement signed by then-Deputy Governor Wanjohi Murithi said it was keenly monitoring affairs of the mother bank and would go to lengths to protect Kenyan depositors.
“In this respect, the CBK has sought and obtained the assurance of the branch’s management that the interests of depositors are not put at risk by the difficulties facing the parent company and that the bank will meet any withdrawal instructions by depositors in the normal course of business,” said Mr Murithi.
CBK added that it had maintained surveillance of the local branch and was satisfied with its solvency and liquidity.
This was meant to stop Kenyans from making panic withdrawals.
For instance, armed policemen would be deployed at the bank’s Nairobi branch on Koinange Street after the bank had announced it would shut its Kenyan operations.
In Britain, thousands of businesses owned by British Asians were on the verge of financial ruin following the closure of BCCI.
Their firms held almost half of the 120,000 bank accounts registered with BCCI in Britain. 
The African Development Bank was also not spared from this mess, with the bulk of its funds deposited and BCCI and stood to lose every coin.
Criminal culture
In Britain, local authorities from Scotland to the Channel Islands are said to have lost over £100 million (Sh15.2 billion in today’s exchange rate).
The biggest puzzle remained how BCCI was allowed by BoE and other monetary regulation authorities globally to reach such levels of fraudulence.
This was despite the bank being under tight watch owing to the conviction of some of its executives on narcotics laundering charges in the US.
Coast politician, the late Shariff Nassir, would claim that five primary schools in Mombasa lost nearly Sh1 million and appealed to then Education Minister George Saitoti to help recover the savings. Then BoE Governor Robin Leigh-Pemberton condemned it as so deeply immersed in fraud that rescue or recovery – at least in Britain – was out of the question.
“The culture of the bank is criminal,” he said. The bank was revealed to have targeted the Third World and had created several “institutional devices” to promote its operations in developing countries.
These included the Third World Foundation for Social and Economic Studies, a British-registered charity.
“It allowed it to cultivate high-level contacts among international statesmen,” reported The Observer, a British newspaper.
BCCI also arranged an annual Third World lecture and a Third World prize endowment fund of about $10 million (Sh1 billion in today’s exchange rate).
Winners of the annual prize had included Nelson Mandela (1985), sir Bob Geldof (1986) and Archbishop Desmond Tutu (1989).
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Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

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Agricultural Development Corporation Chief Accountant Gerald Karuga on the Spot Over Fraud –

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Gerald Karuga, the acting chief accountant at the Agricultural Development Corporation (ADC), is on the spot over fraud in land dealings.

ADC was established in 1965 through an Act of Parliament Cap 346 to facilitate the land transfer programme from European settlers to locals after Kenya gained independence.

Karuga is under fire for allegedly aiding a former powerful permanent secretary in the KANU era Benjamin Kipkulei to deprive ADC beneficiaries of their land in Naivasha.

Kahawa Tungu understands that the aggrieved parties continue to protest the injustice and are now asking the Ethics and Anti-corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe Karuga.

A source who spoke to Weekly Citizen publication revealed that Managing Director Mohammed Dulle is also involved in the mess at ADC.

Read: Ministry of Agriculture Apologizes After Sending Out Tweets Portraying the President in bad light

Dulle is accused of sidelining a section of staffers in the parastatal.

The sources at ADC intimated that Karuga has been placed strategically at ADC to safeguard interests of many people who acquired the corporations’ land as “donations” from former President Daniel Arap Moi.

Despite working at ADC for many years Karuga has never been transferred, a trend that has raised eyebrows.

“Karuga has worked here for more than 30 years and unlike other senior officers in other parastatals who are transferred after promotion or moved to different ministries, for him, he has stuck here for all these years and we highly suspect that he is aiding people who were dished out with big chunks of land belonging to the corporation in different parts of the country,” said the source.

In the case of Karuga safeguarding Kipkulei’s interests, workers at the parastatals and the victims who claim to have lost their land in Naivasha revealed that during the Moi regime some senior officials used dubious means to register people as beneficiaries of land without their knowledge and later on colluded with rogue land officials at the Ministry of Lands to acquire title deeds in their names instead of those of the benefactors.

Read Also: Galana Kulalu Irrigation Scheme To Undergo Viability Test Before Being Privatised

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“We have information that Karuga has benefitted much from Kipkulei through helping him and this can be proved by the fact that since the matter of the Naivasha land began, he has been seen changing and buying high-end vehicles that many people of his rank in government can’t afford to buy or maintain,” the source added.

“He is even building a big apartment for rent in Ruiru town.”

The wealthy officer is valued at over Sh1.5 billion in prime properties and real estate.

Last month, more than 100 squatters caused scenes in Naivasha after raiding a private firm owned by Kipkulei.

The squatters, who claimed to have lived on the land for more than 40 years, were protesting take over of the land by a private developer who had allegedly bought the land from the former PS.

They pulled down a three-kilometre fence that the private developed had erected.

The squatters claimed that the former PS had not informed them that he had sold the land and that the developer was spraying harmful chemicals on the grass affecting their livestock and homes built on a section of the land.

Read Also: DP Ruto Wants NCPB And Other Agricultural Bodies Merged For Efficiency

Naivasha Deputy County Commissioner Kisilu Mutua later issued a statement warning the squatters against encroaching on Kipkuleir’s land.

“They are illegally invading private land. We shall not allow the rule of the jungle to take root,” warned Mutua.

Meanwhile, a parliamentary committee recently demanded to know identities of 10 faceless people who grabbed 30,350 acres of land belonging to the parastatal, exposing the rot at the corporation.

ADC Chairman Nick Salat, who doubles up as the KANU party Secretary-General, denied knowledge of the individuals and has asked DCI to probe the matter.

Email your news TIPS to [email protected] or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

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William Ruto eyes Raila Odinga Nyanza backyard

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Deputy President William Ruto will next month take his ‘hustler nation’ campaigns to his main rival, ODM leader Raila Odinga’s Nyanza backyard, in an escalation of the 2022 General Election competition.

Acrimonious fall-out

Development agenda

Won’t bear fruit

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