The Commissioner of Co-operatives has consequently, appointed an inquiry team to probe and report to him on the investment pursuant to Section 58 and 73 of the Cooperative Societies Act.
Commissioner of Co-operatives Patrick Musyimi said that it’s important that the inquiry team is given sufficient time to work and furnish details of the transaction to his office so that the interests of members of the Sacco are protected as per the law.
“We will share the details of the inquiry as soon as they are finalised. This move will subject the matters to a rigorous process that will ensure that any pertinent issues are addressed before the investment can proceed,” added Musyimi.
The decision follows complaints from the Co-operative Alliance of Kenya which registered its dissatisfaction in handling of the transaction.
Mwalimu Sacco announced on Friday that it has acquired a 51 percent stake at Equatorial Commercial Bank (ECB) at a cost of Sh1.6 billion making it the majority shareholder.
However, Co-operative Alliance of Kenya raised concerns over the deal saying the manner in which the transaction was conducted puts its members’ funds at risk and exposes the society to potential financial loss.
In a letter dated January 21, 2015 to the Ministry of Industrialisation and Enterprise Development, the Co-operative Alliance of Kenya said the transactions overlooked the due process at every stage in the proposed investment.
“We are also concerned about the specific choice of investment, and its suitability, publicly available reports show that the current owners have been stripping some assets before the sale date, the bank in question has an alarming history of loss making, overall poor operational which has resulted in significantly eroded capital, ” says Co-operative Alliance of Kenya.
Mwalimu Sacco CEO Robert Shibutse said the acquisition came following the approval by the three relevant regulatory bodies that include Central Bank of Kenya, Competition Authority of Kenya and Sacco Societies Regulatory Authority (SASRA) to acquire majority stake in the bank.
The teachers Sacco that has about 57,521 members is ranked Kenya’s largest Sacco by assets, which totalled Sh24.5 billion in the year ended December 2013, according to data from SASRA.