By OTIATO GUGUYU
The Greek mavericks Daedalus and Icarus were not known only for flying too close to the sun and melting wax feathers, they also built a labyrinth, a confusing structure of a complex maze, impossible to navigate designed to keep the minotaur beast.
Our versions are the National Treasury and Unclaimed Financial Assets Authority (Ufaa) mandarins who have built an almost impossible system for redeeming unclaimed assets which according to Peris Mungai is a demanding, tedious, and repetitive process.
Ms Mungai says she has twice tried to claim the assets of a deceased relative but felt that the demands were exceptional.
She was met with demands for verification, amendments, certified holders letters, even where the court had already issued a grant clearly stating out the beneficiaries of the deceased.
For shares, she said she was sent back to the broker and the sums charged are more than the shares being claimed or 80 percent of the total shares value being claimed. Unbanked cheques, were never paid up and again the beneficiaries are sent on a wild goose chase.
“The truth of the matter is that Kenyans are not disinterested [in claiming the assets], it is the process that is too demanding, tedious and repetitive. I have tried it twice but the demands are exceptional,” she told the Business Daily as the mountain of unclaimed assets shot up to Sh54.8 billion in seven years.
It has also emerged that part of the problem is that the National Treasury is sitting on reforms that would have made it easier for Kenyans to access the billions in unclaimed cash, shares, and dividends surrendered to the State.
The Treasury is also yet to increase staffing at Ufaa, sign off a partnership between the agency and Huduma centres, and change the law to allow for minimal verification when claiming small amounts.
Ufaa is operating with only 32 staff members handling the Sh54.8 billion portfolio which would put it among the top 10 banks with countrywide branch networks and thousands of employees processing the billions of shillings.
The Business Daily has learnt that an agreement between Ufaa and Huduma Centre entered in April 2020 is stuck in the rut at the Treasury.
The Treasury is also yet to take to Cabinet and Parliament a proposal that would allow claims below Sh1,000 to be accessed with an Identification Card or donated where beneficiaries do not want to claim the money.
Unclaimed assets are usually invested in Treasury bills giving the government a pool of cheap funds when Kenyans fail to process their claims.
“We have an agreement with Huduma centres in principle that would allow us to expand to 52 centres across the country once this is approved at the National Treasury,” Ufaa said.
But the Treasury in an emailed response said the current staff are sufficient to handle the unclaimed financial assets portfolio the Authority is holding.
However, arrangements are in place, to increase the number of staff should the need arise in the short-term, it added.
The Treasury also said that to address the issue of small claims, it appointed a task force that prepared a national policy among other issues. The policy document is under review and will be approved soon.
Huduma centres Partnership
On the issue of the Huduma centre, the Treasury said it received a memorandum of understanding from the Ufaa on January 19, 2022, seeking approval to roll out unclaimed financial assets through Huduma Kenya Service Delivery channels.
It is reviewing the memorandum of understanding and the authority will be advised soon on the next steps.
“Reunification of unclaimed financial assets is the responsibility of Ufaa and the National Treasury, therefore, cannot drag its feet on the matter. It is the mandate of Ufaa to ensure that unclaimed financial assets are reunited with their owners as soon as possible and feasible,” the Treasury said in the response.
Ufaa has only paid out Sh1.5 billion out of the Sh54.8 billion it has collected upon receiving 23,134 claims.
The money is largely held by insurance companies, banks, pension schemes, legal firms, mobile phone money wallets, and Saccos, among others.
The majority of the funds are held in stocks of 1 billion shares worth Sh30 billion and 9.8 million unit trust portfolios worth Sh55 million.
Ufaa is also holding Sh23.1 billion in cash and Sh120 million in foreign currency which it can invest in government securities meaning the government is the biggest beneficiary of the idle money.
Surrendered safe boxes that are believed to contain jewellery, title deeds, share certificates and Treasury bills rose to 2,949 units from 2,873 in June.
According to Ufaa, there are 19 million records out of which 40 percent belongs to Kenyans who have died, 10 percent to institutions, and about 50 percent to beneficiaries who are still alive.
But the puzzle is why Kenyans remain disinterested in pursuing funds legally belonging to them or their families despite the tough economic conditions during the coronavirus pandemic.
Ufaa reckons it is struggling to re-unite the cash with rightful owners or beneficiaries, claiming some are being turned off by the worth of assets.
Slow claims process
The Business Daily has also received a lot of complaints about the tedious process of reuniting beneficiaries with their unclaimed assets since we reported on the slow process of reunifications as one of the biggest reasons for slow claims.
On searching Ufaa website or using the USSD *361# to make a claim enquiry, a claimant is expected to either file physically at the agency’s only offices on two floors at Pacis Centre, off Waiyaki Way or through the internet.
For those making their own personal claims, they need an ID card, Form Four, Form Five, and a holders letter obtained from the company that submitted the unclaimed asset.
These documents have to be certified by a lawyer, which creates the first problem for low-value claims since it may be more expensive to stamp the letters than the money being pursued.
“The cheapest you can get for certified copies from the commissioner of oaths is Sh200 in town or Sh50 at a magistrate court but very few people know this and they go to lawyers who will charge upwards of Sh1,000,” Ufaa said.
Those who want to make claim for their deceased relatives have to obtain a grant from the court that specifies the estates to be transferred to an administrator.
Uninformed public
Ufaa said most people doing successions do not even know their kin had some shares, cash or safety deposit boxes.
By the time they discover about the assets, the court has already issued a grant and they are required to go back to a judge to amend the grant including the unclaimed assets.
Ufaa said it had opted to discuss with judges to request families doing succession to make inquiries about unclaimed assets when compiling the estate of the deceased.
“One only needs to walk to the chamber where the grant was issued and they will get it amended for free, but few people know that. We recently agreed with judges that when succession matters come up in their courts they as the parties to find out if there are unclaimed assets to be distributed as part of the deceased estate,” Ufaa said.
Once the claims are filed Ufaa officials have to physically visit courts to determine if the claimant's documents are authentic and run ID cards through the Ministry of Interior’s Integrated Population Registration System.
Ufaa said there are so many small-value claims which do not make sense for owners, most of who are elderly and retired, to come all the way to Nairobi to obtain a holders letter from companies that surrendered their assets and pay for the certifications or spend time in court.
For instance, despite the fact that Ufaa holds 1 billion units of shares worth Sh30.8 billion, a huge chunk are less than 10 shares per person, worth just hundreds of shillings.
The agency explained that since an investor can buy any amount of shares but only sell multiples of ten, some shareholders who have sold their stakes are not even aware they had an odd lot of shares that were not sold and have now been transferred to Ufaa.
Ufaa said the solution it has proposed to the government is to reduce the amount of paperwork required for low-value claims below Sh1,000 to only require a national ID for claimants.
Those who do not wish to reclaim their assets can then donate them to education institutions, hospitals or even select a specific children’s home.
Those with higher value claims require a more stringent process, meant to avoid the risk of money laundering because the risk of exposure is higher.
Ufaa said already money launderers have tried to exploit the system, citing a Nigerian national deposited money in a bank, waited for the account to become dormant and tried to reclaim the money through Ufaa, but disappeared when asked to provide additional documents.
“About 80 percent of the 19 million records are below Sh5,000 and the majority of the ones above this figure belong to institutions. We have paid Sh17 to an individual and Sh84 million to the Treasury for a defunct state body, these two scenarios should not be treated the same,” Ufaa said.
Compliance audits
The value of the idle assets grew from Sh50.9 billion in June last year to Sh54.8 billion in December.
This is a small portion of what is estimated to be held by private and public players mainly because Ufaa has not been able to cover all institutions.
A baseline survey commissioned in 2018 estimated that Sh241 billion in unclaimed financial assets were still unreported to Ufaa by public agencies and private firms.
The report further showed that about 477,112 public and private entities hold these assets in their books.
Ufaa recently announced a partnership that will see the Auditor-General Nancy Gathungu’s office conduct audits on public sector agencies on compliance with unclaimed financial assets reporting and surrender.
Currently, the authority hires private firms and conducts 10 public sector audits each year.
Penalties
Unclaimed assets include money in bank accounts that has been dormant for more than five years, bankers cheques not cashed and contents in safe deposit boxes unclaimed for more than two years.
Billionaire business owners, former powerful government officials and prominent politicians are on the long list of individuals whose shares have been surrendered to the Treasury.
Reporting and surrender of unclaimed financial assets by all holders is mandatory and is due on or before November 1 every year. Holders are encouraged to file nil returns if applicable.
The law allows the Ufaa to charge any entity that fails to surrender unclaimed assets a penalty of 25 percent of the assets held.
Besides, the authority levies a penalty of between Sh7,000 and Sh50,000 for each day that the assets stayed before being submitted.
The law requires the holding company to search for the rightful owners of an asset before declaring it unclaimed and forwarding it to the Ufaa.
Most of the unclaimed assets are attributed to failure by the deceased to inform the beneficiaries of the assets besides the absence of a will.
dguguyu@ke.nationmedia.com
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