Guarantors spend sleepless nights as kin, friends default

It may seem like a rich man’s struggle that which Nairobi Senator Mike Sonko is encountering after he stood surety for a suspect who has now absconded court, but there is a significant number of Kenyans living in anguish for having committed their property for suspects who have disappeared.

If the accused person hides for long enough that the court believes they cannot be traced, the one who stood surety must pay the money they committed because in law, being a surety means you have promised to produce the accused person in court when required.

Should you fail to pay up, you can be jailed for up to six months — just for being kind enough to put your property in the line so that a suspect faces trial while attending to their normal duties rather than stay in remand till the case ends.

The words of a Kakamega-based judge on this year’s Valentine’s Day as she ruled on a case where a man who stood surety for his daughter-in-law summarise the heavy responsibility that comes with being a surety.

“The applicant (John Mwanje) shall by 1pm on Friday February 17, 2017 pay the sum of Sh200,000 unless by the said time, he produces the accused person before the trial court or shows sufficient cause why the penalty shall not have been paid by the said date and time,” stated Lady Justice Ruth Sitati.

Mr Mwanje had offered himself as surety after Ms Mercy Moraa denied six counts of stealing before she was released on a Sh200,000 bond. She absconded court on December 13, 2016 and switched off her phone, not to be traced again.

SIGNING LOAN PAPERS

The magistrate ordered that Mr Mwanje be remanded but he appealed. Justice Sitati’s February 14 ruling must have caught him by surprise.

“If the order (of paying Sh200,000) is not obeyed, sale of the applicant’s movable property shall issue without any further reference to the court,” she ordered. “The court must point out at the outset that an undertaking such as the one entered into by Mr Mwanje is never made in jest.”

But such pain does not come from the courts alone. There is a considerable number of Kenyans who have gone through hell for signing loan papers as guarantors for people who were unable to pay, with the consequence losing property to lenders.

It often happens as a knee-jerk decision of placing a signature to help a friend or relative get a loan from a financial institution, but the moment of reckoning comes when the gravity of the commitment sets in.

A recent move by the Higher Education Loans Board to write to those who signed as guarantors for students who had defaulted sent shockwaves to a number of Kenyans who may have long forgotten that they had made such a legal undertaking.

“We are contacting guarantors of those who are not easily traceable, probably living in a foreign country, or those who have failed to pay for more than 10 years,” the board’s chief executive officer Charles Ringera told Business Daily. The lender has over 85,000 loan defaulters owing Sh9.7 billion.

Also, employees in various organisations who belong to Saccos are facing the ramifications of signing up as guarantors, at a time when a number of businesses are reducing their workforce due to various factors.

And so it emerges that given the economic realities of the country at the moment, discretion is needed before a person commits to sign up to be a representative of another.

URGED CAUTION

The Nation spoke with two lawyers who urged caution whenever a person signs legal documents in support of another.

Mr Sonko’s burden of having to appear before court to explain why he should not be punished for failing to produce the chairman of the Mombasa Republican Council, Mr Omar Mwamnuadzi, can only be discharged if he pays the amount he committed for the suspect or if the senator serves a jail term, according to Mr Geoffrey Yogo, a Kisumu-based lawyer.

“If he pays the court that amount of the bond, then the obligation is over,” said Mr Yogo, noting that the warrant of arrest against Mr Mwamnuadzi will still stand.

“Once you pay into court, it is up to the police now to look for that person. They cannot look for you. But if you fail to, there are two options: they can either attach your property to recover that equivalent amount; and if you’re not able to pay, then they put you into jail up to a maximum of six months,” Mr Yogo added.

In the case of a bank, if the person who borrowed defaults, then the one who signed up as a guarantor is next in the line.

READ: How sacco members can net loan defaulters.

“The guarantor’s liability arises once the borrower defaults and he should always ensure that the borrower pays up lest his property be sold,” stated High Court judge Francis Gikonyo in a judgement on March 2015 as he deliberated on a case where a man in Kajiado was opposing the sale of his land after a company defaulted on a loan from ABC Bank.

Mr Wycliffe Okutta, a Busia-based lawyer, explained the procedure that banks should follow.

PRINCIPAL BORROWER

“The bank must go to the principal borrower first, and then it must show a cause that it has tried to realise the money or the interest from the person who took the loan and it cannot realise it. That’s when it can go for the guarantor,” he said.

Mr Yogo said: “In Saccos, where people guarantee each other, three to five people can guarantee somebody taking the loan. If the borrower defaults, the remaining loan will be divided among guarantors and recovered from them.”

And as the August elections beckon, one other obligation that some Kenyans may take up — enticed by the stipend — is being an agent of a politician. But being an agent is far from the simple task of supervising the counting of votes.

“When you’re an agent, first of all you have to take an oath that you’re going to comply with the rules and regulations governing the elections. And your duty is to go there and ensure that you are guaranteeing the person you’re standing for as an agent that the election is being conducted in accordance with the law,” explained Mr Yogo.

“If you participate in malpractice as an agent, you will be violating the oath and actually there are even criminal sanctions that can follow,” he added.