A dispute has broken out at the giant Kenya Railways Staff Retirement Benefits Scheme (KRSRBS) over contested payments totalling more than Sh21 million made by their former pension administrators just as their term was ending nearly three weeks ago.
Two weeks ago, on August 9, 2019, Mr James Kariuki Kanyeki and Mr Henry Wamukota Toili, two newly elected trustees of the pension scheme, wrote to the Director of Criminal Investigations, Mr George Kinoti, to investigate the circumstances under which the money was paid.
“We, the new board of trustee members…kindly petition your office to conduct an investigation into activities of the outgoing corporate trustees at the KRSRBS whose tenure of office ended on July 31, 2019,” the letter said.
It added: “By the powers conferred upon us through the deed of appointments that takes effect from August 1, 2019, we have discovered that the former corporate trustee officials made unauthorised withdrawals from two separate bank accounts without following due process.”
The authors of the letter further claimed that the withdrawal was done outside the term of Corporate and Pension Trust Services Limited (CPTSL), which has been managing the pension scheme since July 2012 until the end of July this year.
However, Anthony Kilavi, the chief executive of Zamara Group, which wholly owns the Corporate and Pension, said the claims by the new trustees of the pension scheme are “malicious”.
“This money is our monthly retainer, which is Sh1.25 million per month according to the contract, but which we had not collected for nearly two years,” he said. He said while they have not been summoned to appear before DCI, he was aware of the letter of complaint against them.
Mr Kilavi went on: “The fee referenced was paid procedurally and in accordance with a signed agreement. The authors of the accusations are ill-informed about the matter he is trying to articulate. The Retirement Benefits Authority licenses and regulates pension administrators. They can pronounce themselves on this matter if there is any doubt and need for clarification.”
In their letter to Mr Kinoti, the two KRSRBS board members claimed that the money was withdrawn in two tranches of Sh8,312,500 and Sh14 million on July 31, 2019 and August 2, 2019 respectively. However, Mr Kilavi said the contents of the accusatory letter are false.
“The correct and factual statement is that a professional fee was paid to a service provider as per a signed agreement. The letters instructing payment were issued in July when our contract was in place.”
Mr Toili, who is the national secretary of the Former Kenya Railways Workers Association (Fokerawa), unsuccessfully petitioned the government to stop last year’s AGM, saying Corporate and Pension’s three-year mandate ended in 2015 and had not been renewed by members through a vote.
Corporate and Pension was appointed to manage the KRSRBS on June 29, 2012 and their three-year term lapsed in June 2015. The RBA Act requires that sole corporate trustees only manage a pension scheme for three years after which their term can be extended for only three years by the members through an election.
Audited accounts of KRSRBS as at June 2017 showed the total amount of benefits paid to members was slightly over Sh404 million, while the administration expenses amounted to over Sh932 million.
The KRSRBS was established in 2006 to safeguard the interests of over 10,000 pensioners, and has assets estimated to be worth more than Sh20 billion, most of it in form of prime land parcels around the country, especially in Nairobi and Mombasa.
The new developments come as the DCI investigates the chairman of the Kenya Railway Corporation (KRC) board, Mr Michael Waweru, for possible conflict of interest arising out of his chairmanship of Zamara Group (formerly known as Alexander Forbes).
Our sources said they are looking into some questionable payment demands made by Zamara Group on KRC as well as the manner in which some of KRC’s pension scheme properties were offloaded by the pension manager.
Two months ago, Mr Waweru confirmed that he was the chairman of Zamara long before he was appointed to chair the KRC board in June last year. “I have always disclosed my conflicts in meetings, and right now Zamara’s contract has expired,” he said.
An accomplished businessman, Mr Waweru served as the commissioner-general of the Kenya Revenue Authority (KRA) from 2003 to 2012. He is a former private auditor of retired President Mwai Kibaki.
A certified public accountant and managing partner at audit firm Ernst & Young, Mr Waweru also chairs the board of East African Cables Ltd, which is owned by investment firm TransCentury Limited where he has a stake.