Companies registrar issues alert of land fraud using fake directors

Politics and policy

John Mburugu of ICPSK: The lobby is on the spot over member stamps. PHOTO | FILE 

By GEORGE OMONDI

In Summary

• Change in company records has led buyers who trust official records to be defrauded in deals estimated at hundreds of millions of shillings.

The Registrar of Companies has issued an alert over rising cases of land fraud committed by rogue company secretaries who change directors and ownership status of property firms before selling them.

Registrar General Bernice Wanjiku says the change in company records has led buyers who trust official records to be defrauded in deals estimated at hundreds of millions of shillings.

The fraud starts with the rogue company secretary notifying the Registrar of Companies of change in directorship and ownership of land buying companies.

Unsuspecting land buyers have been relying on searches of company details together with modified records at the Lands ministry to acquire property.

“These cases have recently become so many. They are committed elsewhere but we only get to learn of them when police investigators come to seek details from us,” said Ms Wanjiku without giving details on fraud cases.

“The ease of changing director’s details has worked for the fraudsters. But we are working on changing the rules.”

The new rules require resigning directors to present themselves at the company registry with the resignation letter, an affidavit and minutes of the meeting that authorised the resignation.

READ: Registrar of Companies suspends new rules on directors’ resignation

Company secretaries have criticised the rules saying some directors can use them to blackmail boards by simply refusing to travel to the registrar’s office.

They also cited the difficulty of directors staying outside the country. A committee consisting of company registry officials and the ICPSK is currently discussing the new rules.

Transferring shares

“It was noted that due to the increase in fraud cases at the Companies Registry whereby fraudsters have been irregularly changing directors and transferring shares, the Registrar intended to put measures in place to curb the vice,” ICPSK chief executive John Mburugu said in a statement to its members.

The changes in company records also involved vicious cartels including lawyers, ministry of Land and county government officials.

The registrar has put the ICPSK team on the spot over increasing cases of its members frequently sharing their stamps with brokers, clerks and other unauthorised persons.