PHOTO | FILE This is the plot on which the NSSF plans to set up an ultra-modern conference centre.
NATION MEDIA GROUP
The NSSF board has been dissolved over the organisation’s dealings with the cash-strapped stockbroker, Discount Securities.
Labour
Minister John Munyes’ move to dissolve the board came only a day after
the board of trustees suspended the giant pension fund’s investments
committee for investing Sh1.4 billion through Discount Securities.
Mr Munyes also ordered a forensic investigation into the transactions.
The move follows revelations that the fund’s staff
investment committee had authorised Discount Securities Ltd to trade
NSSF shares, but failed to secure share certificates.
Financial risk
They thus exposed NSSF to financial risk valued at Sh2 billion. Investigation also showed that the fund, with an asset portfolio of Sh82 billion, has no valid documentation for shares valued at Sh1.4 billion.
Although the board had suspended the committee over investment anomalies, Munyes took action against the board itself, bringing to an end the uneasy relations between him and it.
With the market jittery over liquidity problems at Discount Securities, pressure is mounting on all those who had dealings with the stockbroker to step aside.
Munyes’ order for a forensic audit of the fund’s deals with Discount Securities came as panic hit the capital market as indicated by a drop of 5.52 points in the Nairobi Stock Exchange 20-Share Index to stand at a low 3,794.29.
"I want to agree with you (journalists) that this is a scam that can only be comparable to Goldenberg," explained an agitated-looking Munyes.
Addressing a Press conference at the Fund’s headquarters in Nairobi, the minister said the extent of the potential financial loss had been brought to his attention by the Capital Markets Authority and a preliminary audit that revealed the exposure.
Buying and selling for NSSF
Labour PS Beatrice Wasike, who accompanied the minister at the Press briefing, said: "It’s only yesterday that we learnt that Discount Securities has been selling and buying shares on behalf of NSSF and that the fund is exposed to the level of savings worth Sh1.4 billion."
The shocking revelation, she said, was the basis for the interdiction of the NSSF Staff Investment Committee that authorised the deals with the troubled stockbrokers.
A standoff between the ministry and the board of trustees is likely as FKE also said it was not aware of the sacking.
I can’t comment because I’m not aware. He has not talked to us," said Mugo, the federation’s executive director.
Last month, Munyes sent Mrs Lumbasyo on a 90-day leave pending retirement to pave way for investigation into the management of the pension fund.
The minister said his decision to sack Lumbasyo was based on her inability to keep him informed of key decisions taken by the institution and board.
The minister was reportedly unhappy over the sale of a piece of land in Nairobi adjacent to the Laico Regency (formerly Grand Regency Hotel), which had been sold to an Indian tycoon.
Land sold without permission
Munyes said he took the decision because the NSSF had sold the land without seeking his authority and the transfer of ownership done without the new owners paying.
However, his decision was challenged by the board of trustees, who accused the minister of not following "due process" in interdicting Lumbasyo and the subsequent appointment of Mr Fred Rabongo, a marketing and public relations consultant, in an acting capacity.
But Head of Public Service Francis Muthaura wrote to the Labour minister, disapproving his decision.
Prime Minister Raila Odinga nullified the appointment of Rabongo as the acting managing trustee.
The NSSF invests the funds it receives from employers as monthly contributions in property, banking, bonds and land.
Financial risk
They thus exposed NSSF to financial risk valued at Sh2 billion. Investigation also showed that the fund, with an asset portfolio of Sh82 billion, has no valid documentation for shares valued at Sh1.4 billion.
Although the board had suspended the committee over investment anomalies, Munyes took action against the board itself, bringing to an end the uneasy relations between him and it.
With the market jittery over liquidity problems at Discount Securities, pressure is mounting on all those who had dealings with the stockbroker to step aside.
Munyes’ order for a forensic audit of the fund’s deals with Discount Securities came as panic hit the capital market as indicated by a drop of 5.52 points in the Nairobi Stock Exchange 20-Share Index to stand at a low 3,794.29.
"I want to agree with you (journalists) that this is a scam that can only be comparable to Goldenberg," explained an agitated-looking Munyes.
Addressing a Press conference at the Fund’s headquarters in Nairobi, the minister said the extent of the potential financial loss had been brought to his attention by the Capital Markets Authority and a preliminary audit that revealed the exposure.
Buying and selling for NSSF
Labour PS Beatrice Wasike, who accompanied the minister at the Press briefing, said: "It’s only yesterday that we learnt that Discount Securities has been selling and buying shares on behalf of NSSF and that the fund is exposed to the level of savings worth Sh1.4 billion."
The shocking revelation, she said, was the basis for the interdiction of the NSSF Staff Investment Committee that authorised the deals with the troubled stockbrokers.
A standoff between the ministry and the board of trustees is likely as FKE also said it was not aware of the sacking.
I can’t comment because I’m not aware. He has not talked to us," said Mugo, the federation’s executive director.
Last month, Munyes sent Mrs Lumbasyo on a 90-day leave pending retirement to pave way for investigation into the management of the pension fund.
The minister said his decision to sack Lumbasyo was based on her inability to keep him informed of key decisions taken by the institution and board.
The minister was reportedly unhappy over the sale of a piece of land in Nairobi adjacent to the Laico Regency (formerly Grand Regency Hotel), which had been sold to an Indian tycoon.
Land sold without permission
Munyes said he took the decision because the NSSF had sold the land without seeking his authority and the transfer of ownership done without the new owners paying.
However, his decision was challenged by the board of trustees, who accused the minister of not following "due process" in interdicting Lumbasyo and the subsequent appointment of Mr Fred Rabongo, a marketing and public relations consultant, in an acting capacity.
But Head of Public Service Francis Muthaura wrote to the Labour minister, disapproving his decision.
Prime Minister Raila Odinga nullified the appointment of Rabongo as the acting managing trustee.
The NSSF invests the funds it receives from employers as monthly contributions in property, banking, bonds and land.
But the board immediately went on the offensive and threatened to move to court today to block the sacking.
Cotu
Secretary-General Francis Atwoli dismissed the sacking, saying the
minister had no powers to appoint or sack members of the board.
"He
is a day-dreamer. He must read the Act properly before imagining that
he could appoint or sack members of this board. His action is null and
void and we shall be moving to court to prove that," he said.
Not a shareholder
Mr Atwoli said the Government was not a shareholder at the Fund and the money belonged to workers, not the Exchequer.
He claimed that Munyes was undermining the board composed of social partners.
"We
are not Government appointees, but representatives of workers and
employers. The minister is only supposed to work with us and not lord it
over us," he said.
The
minister seemed to have had the last laugh when he sent the nine-member
board packing only a month after a standoff over his suspension of
former Managing Trustee Rachael Lumbasyo.
The
board members include Ms Jane Mwangi (chair lady), Ms Jacqueline Mugo
(Federation of Kenya Employers executive director), Atwoli, Mr Patrick
Obath (FKE chairman) and PS Treasury and Labour ministries.
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