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Gakuyo siphoned Sh1.5bn from Ekeza Sacco, audit reveals how

Tuesday February 26 2019
By ERIC WAINAINA

Details have emerged of how besieged televangelist “Dr” David Kariuki Ngare, alias Gakuyo, siphoned more than Sh1 billion belonging to 78,000 members, mostly peasants, of the troubled Ekeza Sacco.

Mr Kariuki is said to have used the money to upgrade his lifestyle by buying prime properties for his family and boosting his struggling real estate firm.

CASH OUTFLOWS

About Sh1.5 billion was unlawfully transferred to the accounts of Mr Kariuki’s Gakuyo Real Estate, where he is the managing director and his wife Hannah Wachu a co-director.

Some of the money was withdrawn using the sacco’s vice-chairman James Wanjuu and secretary Gladys Muriithi “for activities of Gakuyo Real Estate and its directors” under the preacher and politician’s instructions.

Only an estimated third of the money — Sh507,900,374 — could be traced to members who took out loans from Ekeza to acquire properties from Gakuyo Real Estate, meaning an estimated Sh1 billion went to the “Man of God” and his accomplices.

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Though members of the management and supervisory committees were drawing salaries, they had abdicated their roles, leaving Mr Kariuki, who has been grappling with allegations of faking academic papers, to run down the sacco by using its money to finance his personal businesses.

A damning audit report by the government on the sacco’s operations has revealed that irregular cash outflows of an estimated Sh1.5 billion from Ekeza accounts to Gakuyo Real Estate, Mr Kariuki, Ms Muriithi, Mr Wanjuu and some law firms were made between 2015 and 2018.

About Sh1.419 billion was irregularly transferred from the sacco’s Equity Bank account, with Sh88,138,375 transferred in 2015; Sh850,463,877 in 2016; Sh454,097,630 in 2017; and Sh27,002,220 last year.

PALATIAL HOME

In 2017 when Mr Kariuki was running for Kiambu governor, before withdrawing in favour of the eventual winner, Mr Ferdinand Waititu, Sh145, 529,691 was irregularly transferred from the Co-operative Bank, another Sh24,980,300 was transacted as petty cash and Sh543, 915 from branches.

The audit was carried out by assistant director of co-operatives Stephen Njoroge and principal co-operative officer Philip Uluma, who were appointed by Commissioner of Co-operatives Mary Mungai on December 17 last year following complaints from members.

The probe released on Friday last week shows that, in one instance, Mr Kariuki worked with Susan Kahoya & Company Advocates to withdraw Sh227 million from Ekeza accounts between May 2016 and March 2018. The money, according to investigations, was not for services rendered to the sacco as the firm has never been instructed to act for the sacco.

After the withdrawals, the cash, according to bank statements seen by investigators, was disbursed to finance the activities of Mr Kariuki and those his real estate firm in actions that could amount to obtaining money by false pretence.

Some Sh99 million was used in the purchase of a Sh200 million house — LR Number 12241/37 and 12241/38 — at the leafy Nyari Estate, near the United Nations offices in Gigiri, from former Machakos’s senator Johnson Muthama’s JNM Holdings Ltd.

The palatial home, which is where Mr Kariuki lives, sits on about one acre, and according to his friends who have visited the property, it is an eight-bedroom house with detached servant quarters, a swimming pool and a parking lot for at least five cars.

MISAPROPRIATION

This is one of the properties the preacher is willing to sell so that he can refund the money that he fraudulently siphoned from the sacco through the probe described as misappropriation of funds.

Another Sh87 million and Sh41 million bought land for Gakuyo Real Estate at Mavoko Town-block 3/23242 and 3/23243 and Mitubiri/Wempa block 1/6824 in Muran’ga and whose cost price was Sh86 million and Sh242 million respectively.

Some Sh165 million directly went into benefiting the preacher’s personal development and that of his real estate firm.

“We find these payments from Ekeza Sacco Society of Sh227,000,000/= to Susan Kahoya & Company Advocates to be misappropriation of sacco funds by the chairman Mr Kariuki and that he should be held liable to refund these monies back to Ekeza Sacco society Limited,” reads the report in part.

Money to law firms

Another law firm, S.I. Mwaura & Co. Advocates, was used in the withdrawal of Sh244million, some of which was used to buy land in favour of Mr Kariuki and his real estate firm.

Out of the total amount, Sh164,040,000 was transferred to land vendors for land purchased in favour of Mr Kariuki and Sh36,055,661 in favour of Gakuyo Real Estate.

Only Sh10 million went to the activities of Ekeza, through SI Mwaura and Co. Advocates, although she was not acting for Ekeza but Gakuyo real estate.

DEFAULTED

“We find that the chairman (Gakuyo) used the advocate to transfer Sacco funds totalling Sh211,005,451 to his personal use and run his personal business. Whereas S.I Mwaura indicates in his letter that the chairman promised to refund the funds to Ekeza Sacco Society Limited, we did not find any loans application forms by Mr Kariuki to that effect,” states the report.

Gathoga Wairegi & Co received Sh22,010,000 without authority, money that the preacher accepted as part of the money he owes Ekeza Sacco.

Mombasa-based John Bwire & Associates advocates received Sh11,268,000 and in an interview with the auditors, Mr Kariuki confirmed that the transfer was for the purchase of land and that it was not an activity of Ekeza Sacco.

The sacco also advanced Sh4, 656,784 in credits to the management committee, staff and their close relatives with total disregard for the loan policy and some of the beneficiaries had defaulted, and also gave loans to non-members.

Whereas the policy stipulates that loans should be granted three times a member’s savings, staff members and officials were given loans without any criteria.

DEDUCTED

In an astonishing instance, Ann Kanyua Mbobua, a sacco committee member, had savings of Sh22,000 but was granted an unsecured loan of Sh524,000, more than 23 times her savings.

Lydiah Nyaguthi, an employee of Gakuyo Real Estate and also a board member of Ekeza, was granted a loan of Sh2,800,000, more than 13 times her savings of Sh205,000.

Ms Muriithi was granted a Sh3 million loan, which she was not servicing, while Moses Mwangi, a committee member, was granted a loan of Sh6 million and by the time of the audit, he had a balance of 4.2 million, which was not being serviced.

Further, the probe revealed that in some branches, notably Nyeri, Nanyuki, Mwea, OTC, Ronald Ngala and Tuskys, staff diverted members’ contributions to their own use while Sh40 million deducted from Gakuyo Real Estate staff was never remitted.

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