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Fraud

Faulu Bank Receives Ksh. 1.45 Billion Boost Despite Internal Fraud, Management Wars And Nepotism.

Apollo N. Njoroge, Managing Director, Faulu Bank

Faulu Bank has received a Ksh. 1.45 billion capital injection from its parent company, Old Mutual Africa, to allegedly “support its growth strategy ” despite claims of nepotism, fraud and corruption that have marred the once successful venture.

A dossier sent to the editor of this site has unearthed tribalism, sexual harassment and internal dealings between senior staff and auctioneers at Faulu Microfinance.

The MD, Mr. Apollo Njoroge has been accused of not being a team player and has been witch-hunting two senior managers for having leaked confidential documents to media concerning a list of all staff employed that favour one region, auctioneers engaged by the bank that are said to wine and dine with the management, salary disparities within the bank, suspicious allowances payment and the top managers who benefit, nepotism in employment and witch-hunting.

One such witch-hunting case involves Dolly Nyambura who was employed as the head of Bancassurance on September 12 2017 at a salary of Sh450,000 per month. On May 24 2019, she was given a show-cause letter on alleged breaches of procedures and summoned for disciplinary action on May 31 2019. Her employment was terminated on June 10 2019.

The editor of this site has been tipped that, Faulu Bank’s then legal officer Steve Nyagah and the MD colluded to sack Nyambura to have a friendly face head the department. Currently, Rose Kimani heads the Bancassurance with Sheila Maina the legal head.

Sheila Maina

Last year, three workers who had been sacked by the bank moved to court to stop the process on the ground it was victimisation and aimed at covering inside happenings in the bank. It is imperative to note, Faulu Bank has been on the radar of the Competition Authority of Kenya for making misleading representations on loans issued to their customers.

Documents from the CAK to Faulu show it was fined Sh150,000 for contravening sections of the Competition Act that seeks to protect consumers from misleading representation and engaging in unreasonable conduct to secure or maintain customers. Section 55 (B) (i) of the Act bars microfinance institutions from giving false and misleading information on the price of goods and services. In the case of Faulu, the penalty was 10pc of the complainants’ loan value for Sh1.5 million taken. The move by CAK came when Apollo was the MD having joined the bank in 2016.

In the High Court in Kisumu civil appeal case No 79 of 2017, Bahati Murwa has appealed from the judgement of the chief magistrate’s court at Kisumu WK Onkunya SRM delivered on November 10 2017 in CMCC No 310 of 2016. This was following the dismissal of the suit he had instituted against Faulu Bank on May 23 2014, where he had asserted that he was the registered owner of a motor vehicle KAR 667Z, Renault Prime Mover. The case was that that Faulu Bank registered a financial facility with themselves, without his consent, authority or knowledge.


He emphasised that he had never applied to Faulu Bank for any financial facility. Murwa asserted that by charging a financial facility to his name, Faulu Bank perpetuated fraud and negligence against him. He set out seven particulars of the alleged fraud and negligence. Faulu Bank had said that Linda Brenda Atieno Wanjala, whom the Murwa had guaranteed, was not a fictitious person and recovered the vehicle after Atieno failed to repay a loan she took.

Another case is in which a 70-year-old widow sued Faulu Bank and an auctioneer for allegedly defrauding her of Sh150 million property in Huruma, Nairobi Alice Wanjiru Wamwea is battling to save the said property after it was auctioned by the bank through Antique Auctions to recover an Sh65 million debt. She says the bank falsely accused her of failure to offset the loan before auctioning the property. Wamwea accuses Faulu Bank of a well-calculated scheme to defraud her the seven-storey building located in Jonsaga, Huruma Estate.

Peter Gachuba

She bought the property at Sh16 million in 1991 while it was a three-storey building and added four more storeys. She says at one time, she discovered the bank had debited her Sh6 million which was done by some bank officials without her knowledge. Wamwea says at one time a teller from the bank called her to inform her she was stupid for signing property transfer form without reading it, a transfer she was unaware of. She wrote to the Directorate of Criminal Investigations’ Banking Fraud Investigations Department to complain about Faulu’s misconduct. BFID investigated the matter and charged six people and a company over the fraud. The suspects are Mugweru Mwangi, Kefa Onsongo, Waweru Maina, Paul Mwangi, Esther Muthoni Njoroge, Tom Mboya Jaseme and the firm Oksama Investment Supplies Ltd and the auctioneers. They were charged with conspiracy to defraud her the said property by means of fraudulent auction and forging her signature in the loan application forms. The criminal case is still pending while the civil suit will now be heard on November 6.

Fraud: Faulu Bank Defrauds A Lady Of Her Property

In March 2017, an auction advert was circulated by Antique Auctions under instructions from the bank to allegedly recover Sh73 million when the statements indicated she only had an outstanding loan of Sh7 million. Antique Auctions went ahead and sold the property to Oksama Investment Supplies Limited, which Ms Wamwea is now pursuing to be reversed to her. Recently, Faulu Microfinance Bank shut four branches in Nakuru, Taita Taveta, Meru and Kirinyaga under a consolidation drive that will see it save on rental costs. The microlender announced the Central Bank of Kenya had approved its application to consolidate some of its branches and marketing offices.

 

The trimming of branch count was expected to significantly reduce rent expenditure as customers are pushed to digital platforms such as mobile banking. The closure of the four branches has resulted in job losses as has been witnessed in other financial service institutions that have taken this route. The Bank has eight branches in the Nairobi region, 15 branches in the Eastern region, 11 branches in the Mount Kenya region, seven branches in the Western region, 12 branches in Rift Valley region, eight branches in Central Rift, eight branches in the Coast region and three branches in Nyanza region. Faulu board chairman is George Maina with directors Peter Gachuba, Sophia Mukoba, Peter Morgan and Nkitote Njiru. The troubles facing the bank have to do with managing director Njoroge.

Njoroge is said to have left Equity Bank as acting MD Uganda branch. Sources say Njoroge could not land a lucrative slot at Equity Bank despite having acted as MD. He was accused by the bank management of not being a team player and not being innovative. Staff had openly complained of his failure to implement and act on certain burning issues such as risk management. Njoroge’s poor working record has seen him move from one working place to another sensing sacking.

Faulu Microfinance Bank MD opening a new branch in Limuru Town, Kiambu County.

He left African Banking Corporation in unclear circumstances although our source revealed, it had to do with mismanagement. Njoroge also worked at Investments & Mortgages Bank but also left after falling out with directors. Many had expected him to land a plum position at Equity Bank but was blamed for making a kill in the acquisition of an Uganda based Micro-Finance that was turned into a bank. At Faulu, Njoroge is blamed for the expansion of branches that have turned to be white elephant leading to closure. The closure of branches will see the bank pay millions in compensation to avoid legal aspects. The bank used Sh113 million, according to documents in our possession, for branches expansions only to be close shortly without breaking even.


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