Unclaimed Financial Assets Authority in slow trace of assets
The Unclaimed Financial Assets Authority (UFAA) has not been tracing and reuniting unclaimed assets with beneficiaries effectively, the Auditor General has said.
UFAA which began receiving unclaimed financial assets from holders in 2014 started the process of re-uniting the assets with beneficiaries in 2016 as mandated by law.
However, the reunification rate has remained low, having increased marginally from one per cent in 2017 to 2.7 per cent as of June 30 2020, according to an audit report by the Auditor General.
“In the circumstances, the authority is not meeting its mandate of tracing unclaimed assets and reuniting them with the beneficiaries efficiently and effectively,” reads the report in part.
UFAA management attributes the slow pace to Unclaimed Financial Assets (UFAA) regulations 2016 saying they do not adequately support the reunification with owners.
The management has already submitted a proposal to the National Treasury to have the regulations amended.
Reports indicate that unclaimed cash, shares and dividends surrendered to the State agency crossed the Sh50 billion mark as tycoons and politicians show little interest in reclaiming the idle assets. The authority has paid out 6,000 claims totalling to Sh1 billion this year.
The authority says many Kenyans are disinterested in pursuing funds that legally belong to them or their families with billionaire business owners, former government officials and prominent politicians on top of the list whose shares were surrendered to Treasury.
UFAA also holds surrendered safe boxes that are believed to contain jewellery, title deeds, share certificates and Treasury bills.
Unclaimed assets include uncollected deposits paid when bidding tenders, caution money paid is learning institutions and deposit paid to utility firms among others.
Appearing before the parliamentary departmental committee on Finance and National Planning in November last year, UFAA chief executive, John Mwangi, attributed the low payout to lengthy claiming procedures as outlined by the law, which discourage most of the claimants from filing claims.
Mwangi said over 90 per cent of the assets are below Sh,5000 in value making it not financially viable to follow up the expensive claiming procedure.
At the time (November 2020), Mwangi told the parliamentary committee that UFAA paid out only Sh339.4 million to claimants in 2019 despite holding Sh16.1 billion in unclaimed assets.
However, this was an improvement compared to 2018 where the authority paid out Sh95.2 million in claims out of Sh13.5 billion recovered that year.
The authority is only mandated to track and reunite financial assets with their rightful owners, not physical assets such as land and property.
A study carried out by the authority in 2019 revealed that holders are holding approximately Sh241 billion in unclaimed assets that is yet to be surrendered to the authority.
The holding institutions, however, are yet to surrender the money mostly due to unwillingness and lack of cash flow.
During the financial year ended June 2020, UFAA realised Sh675.9 million in revenues, including Sh199, 900 allocated from the exchequer.
The amount also includes Sh4.86 billion which the Treasury Cabinet secretary allowed UFAA to utilise from the trust fund.
Budget utilisation, however, was low at 78 per cent of the budgeted funds something UFAA blamed on low absorption of staff emoluments.