You don’t start building a house from the roof. In implementing the Unclaimed Assets Act, the Ministry of Finance has completely missed the plot.
By November 1, all commercial banks, insurance firms and listed companies holding unclaimed assets in their books must surrender the money to the Unclaimed Assets Authority.
In the last two months, commercial banks holding assets whose owners cannot be traced have been putting adverts in the newspapers informing members of the public to come forth and claim their assets.
Listed companies have been calling on wananchi to collect their unclaimed shares and dividends. I have counted at least 10 companies that have put out such notices.
Actually, some leading commercial banks have openly declared that they are holding hundreds of millions of shillings in unclaimed assets.
According to the new law, any asset that has been unclaimed for three years, including dormant bank accounts, jewellery and gold kept in safe deposit boxes, and unclaimed dividends, have to be surrendered to the authorities.
The irony is that even as the time keeps ticking away to the November 1 deadline, and though the money at stake runs into billions of shillings, the Unclaimed Assets Authority is not yet in place.
The board has not been appointed and neither has the chief executive. Why is the government putting the cart before the horse by gazetting the effective date of the new law before putting in place even a rudimentary mechanism for executing it?
This is not a very transparent way of conducting affairs. I say so because what we are dealing with here is an authority, which is going to hold billions of shillings of public funds right from inception.
Do we, really, want to create another source of largesse for the political elite? If we don’t get the legal and corporate governance regime right from inception, we will have created another National Social Security Fund, which the “eating chiefs” will be more than pleased to welcome as just another avenue for collecting patronage resources.
As I went through the Act again, I was encouraged by the fact that the authority has been given the leeway to contract service providers — including custodians, fund managers, administrators and reunification agents.
Section 49 of the Act says that the fund “may” appoint service providers. In my view, this arrangement is not good enough.
When it comes to establishing the authority, we should adopt the legal and corporate rate governance regime applicable to pension funds under the Retirement Benefits Act in full — root and branch.
I am apprehensive about the prospect of putting such a huge fund under the management of political appointees.
Indeed, the beauty of the RBA regime is that the trustees don’t touch the money. You are obligated by law to appoint a custodian, a fund manager and an administrator. Everything is conducted at arms-length. Even the fees charged by the service providers must be approved by the RBA.
I am not suggesting that the Unclaimed Assets Authority be governed under RBA laws and regulations. But the point must be made that when it comes to managing or disposing of assets whose owners have disappeared, the transparency levels must be held even higher.
The size and establishment of the authority will also be critical. We don’t want some bureaucratic monolith that will choke it with huge administrative costs.
Ideally, this thing should be run along the lines of a policyholders fund: A very small secretariat staffed by a handful of highly-skilled professionals with relevant experience.
In the meantime, if you migrated and left a fixed deposit account in a bank you haven’t transacted with for a long time — dividends you have not claimed for years or a life insurance policy that matured while you were away — move quickly and claim your cash before the new law catches up with you.
If you migrated overseas a long time ago and left behind a deposit with a utility company such as Kenya Power or Nairobi Water Company Ltd or Telkom Kenya, the funds will be deemed as abandoned assets under the new law and handed over to the authority.