Laisamis MP Joseph Lekuton is a little-known legislator without much of a national profile or recognition.
Yet the man is the force behind a private member’s Bill that has sent shock-waves through the financial sector.
The Unclaimed Financial Assets Bill was tabled for the first reading on May 10 this year.
Last week, the Leader of Government Business, Vice-President Kalonzo Musyoka, included it in the most urgent list, Bills that Parliament must tackle this session.
In a nutshell, the Bill proposes to create a government bureaucracy — the Unclaimed Assets Authority — with powers to take over all such assets sitting in dormant accounts with either commercial banks, insurance companies or unpaid dividends sitting in the books of quoted companies.
The moment this new authority is created, banks, insurance companies, and listed companies with unpaid dividends in their books will be forced to immediately transfer billions of shillings to the State-controlled behemoth.
Just how much money are we talking about here? There was a time when the total was estimated at Sh200 billion sitting in dormant accounts within the financial system.
But the most reliable information is what is contained in a survey by a government task force on unclaimed assets in November 2008.
It revealed that Sh3.6 billion was sitting in accounts that have not been transacted for many years.
A total of Sh1.8 billion was found in dormant current accounts. If you add to other unclaimed instruments, including un-presented cheques, unclaimed drafts and so on, commercial banks alone were found to be sitting on Sh7.4 billion.
Listed companies reported Sh1.5 billion, insurance companies Sh243 million, Kenya Power Sh66.8 million and the NSSF Sh243 million. The survey did not look at the property market.
Inadequate responses were received from insurance firms. What were the most common reasons listed for customers being separated from their accounts?
The survey revealed three reasons: Death, relocation overseas and incorrect customer and account details.
The most controversial aspect of the Unclaimed Assets Bill is the proposal to grant the agency powers to sell abandoned assets at a public auction after only three years.
This implies that after three years, and with the assets having been handed over to the agency for liquidation, the owners of this money will not be entitled to interest or dividends.
Enough background. Here are my views on this draconian piece of legislation. I fully support the idea of introducing a new regulatory framework for dealing with unclaimed assets.
What I disagree with is that some bureaucrat sitting on an arm-chair and carrying a lofty title, “director-general of the Unclaimed Assets Authority”, should be allowed to come near this money.
If we allow this, it will not take long before the political elite turn it into another source of largesse. Is it a mere coincidence that the Bill is being rushed at a time when we are about to go into an election?
Yes, there is a very strong case for regulating the handling of unclaimed assets. But regulation should not go beyond providing a framework for monitoring and setting up more transparent disclosure standards.
Banks which hold billions in dormant accounts, and listed companies holding hundreds of millions of unclaimed dividends, must be forced to regularly report these assets.
I also support the idea of stretching the period after which an asset can be declared as abandoned as long as possible. In some countries, this period is fixed at 15 years.
Why are we in a hurry to transfer hard-earned savings to the State after only three years? This country has a very large diaspora that remits hundreds of millions of shillings in foreign exchange every year.
Indeed, diaspora remittances constitute a large component of our balance of payments accounts. What signals are we sending to Kenyans in the Diaspora?
Have we forgotten that we now have a Constitution that protects private property? The Unclaimed Assets Bill must be overhauled.
The spirit should be to give citizens and beneficiaries as much time as possible to reconnect with their hard-earned savings.