Parliament support rules to tame rogue saccos
Parliament has vowed to support new regulations being fast-tracked by national government to rein in ponzi schemes purporting to be savings and credit Co-operative organisations in order to defraud the public.
A consultative meeting between Committee on Delegated Legislation and the State Department of Co-operatives heard that pyramid and Ponzi-saccos have been used to hoodwink Kenyans as genuine operators, only to always collapse with public funds thereafter.
The two parties discussed the Saccos Societies (Non-Deposit Taking Business) Regulations 2020, after which the committee is expected to discuss further before approving them to allow the Saccos Societies Authority (SASRA) regulate the Non-DTS.
Illegal institutions
Tiaty MP Kassait Kamket who chairs the committee, assured that Parliament is behind the national government’s move to tame the illegal institutions that have been defrauding Kenyans their hard earned money.
“Absence of strong regulation in the Sacco sub-sector has created a leeway for unscrupulous business players to operate illegal institutions in the name of credit taking and thus trick depositors to save their money with them,” he said.
This, Kamket added, has led to the majority of Kenyans losing their savings especially when the institutions collapse as the authorities cannot trace their background.
He said the core activity of receiving deposits and offering loans to the same members have been completely diluted as the directors and managers place the investors’ money to activities that suit only their interests.
Principal Secretary for Cooperatives Ali Noor Ismail said that the non-DTS popularly known as Back Office Service Activities (BOSAs) despite receiving huge deposits from Kenyans have continued to operate without strong regulations.
This, he added, makes it easy for the institution’s management to divert savings into other activities other than those prescribed in law.
Co-operative Act, the PS said lacks the muscle to regulate the BOSAs thus supporting dubious actions by the owners, directors and managers to embezzle members’ funds.
Ismail said lack of strong regulations to manage the Saccos that are not controlled by SASRA has led high racketeering, leading to the majority of members losing their deposits.
“Co-operative Act Cap 490 provides suitable grounds for the formation of Saccos but at the same time lacks more energy to regulate the same thus creating a leeway for prominent individuals who are owners of Non-DTS to take advantage of loopholes in the legislation to swindle Kenyans their hard earned sweat,” he added.
