RBA revokes Laptrust licence over anomalies
What you need to know:
- RBA is concerned about the relations and governance of the two entities, saying that although the pension scheme is a public entity created by a Gazette notice and subject to ministerial direction, its offshoot, Laptrust, is managed as if it were a private firm.
- The RBA board has also held that the position of Mr Kiili — as MD of both entities — places him in a conflict of interests situation.
- The Attorney-General later put out a legal opinion where he said the board of trustees of the State-controlled scheme had erred in creating a separate firm.
The Retirement Benefits Authority has revoked the licence of Laptrust Administration Services, one of the largest administrators of pension schemes in Kenya.
The development has far-reaching implications, especially to parties with existing contracts with the company.
Laptrust is an offshoot of the giant Local Authorities Pensions Trust that holds pensions contributions and savings of more than 3,000 former employees of the defunct local government authorities — including current employees of county governments.
Mr Hosea Kiili doubles as CEO of both the pension schemes and the administrator of the fund, while the chairman of Laptrust is the corporate executive and chief operating office of Equity Bank, Mr Julius Kipng’etich.
The pension scheme itself has Sh25 billion in assets, all under management of the outfit, whose licence has now been revoked.
RBA is concerned about the relations and governance of the two entities, saying that although the pension scheme is a public entity created by a Gazette notice and subject to ministerial direction, its offshoot, Laptrust, is managed as if it were a private firm.
The RBA board has also held that the position of Mr Kiili — as MD of both entities — places him in a conflict of interests situation.
A LEGAL OPINION
The regulator maintains that the relationship between the two entities was not at arm’s length, and that Laptrust has taken advantage of this to charge the scheme high fees.
Documents seen by the Nation show the tiff between the two has been going on for nearly three years.
Two years ago, RBA ordered an inquiry to determine whether Laptrust was a government body subject to ministerial direction.
The Attorney-General later put out a legal opinion where he said the board of trustees of the State-controlled scheme had erred in creating a separate firm.
A board meeting last Thursday ruled that Laptrust had not acted to eliminate the conflict of interest situation despite several reminders.
RBA also directed the firm to reduce its administration charges, arguing that at 2.5 per cent of assets under administration, the fees were too high when compared with the industry average.
Apparently, the board of trustees of the pension scheme on January 1 reduced administration fees from 2.5 per cent of net assets to 2.25.
