How Posta bosses trapped staff in loans scam

Thursday, March 12th, 2020 08:32 | By
Cotu disputes claims of bad blood with the government
Cotu deputy secretary general Benson Okwaro. Photo/PD/DAVID NDOLO

A new dossier has revealed how the top leadership of the Postal Coproration of Kenya (Posta) has been tricking desperate employees to borrow money from makeshift mobile-lending platforms so as to earn a commission.

It is a further indictment of Postmaster General Dan Kagwe, whose contract has been extended by three years despite serious allegations of mismanagement, the corporation has exposed its staff to money merchants who will stop at nothing to enrich themselves and their cronies.

Documents seen by People Daily show that desperate Posta employees have been queuing to borrow money from InStapesa Limited and One Moja Limited and paying high interests.

The two companies have transacted loans worth millions of shillings from the 2,800 Posta employees, majority of them in financial stress.

Insiders told People Daily that employees with pending bills have been the worst hit by the predatory lending.

Contract extension

“We are unable to access normal banks for loans because the Credit Reference Bureau (CRB) has blacklisted us... we have families and children going to school. Last month we were paid on the 18th and now on the 11th we have not received our salaries,” said an employee .

Other workers have been forced to go to shylocks who charge astronomical interest on loans and have short timelines for repayment.

It is a serious indictment of Kagwe under whose leadership the borrowing system was established.

Yesterday, the Communication Workers Union of Kenya (Cowu) vowed to go to court to block Kagwe’s contract extension.

“We are exploring all options which include going to court to ensure this appointment is revoked,” Cowu general secretary Benson Okwaro said.

“Kagwe came from EMS and we expected him to turn around the corporation but he has done the opposite. Right now, we cannot offer the services we used to offer because of mismanagement,” he said.

The union urged the Directorate of Criminal Investigations to investigate corruption allegations including misappropriation of funds and irregular leasing of Posta assets.

We also established that last month, the Ethics and Anti-Corruption Commission had summoned Kagwe and other top Posta officials to explain irregular procurement claims and underhand leasing of Posta assets.

They were ordered to submit financial statements of the struggling corporation, procurement documents and leasing contracts of the affected property.

“The Posta investigation is progressing ... I’ll get details from my boss and get back to you,” EACC spokesman Yassin Amaro said yesterday.

Okwaro decried the alleged deliberate delaying of salaries to force staff to take mobile loans saying the act was criminal and the culprits should be arrested and prosecuted.

“You can see also that Posta has not remitted staff pension and insurance contributions between 2015 and 2020 totalling Sh933 million,” he said.

In 2018, the Director of Criminal Investigations (DCI) George Kinoti wrote to the corporation’s management describing the nature of investigations he was about to launch.

Consequently, detectives raided the Posta offices in Nairobi as they intensified investigations into alleged misappropriation of funds by the management.

This followed reports from informants who alerted the DCI about alleged fraud at the corporation and demanded documents that showed how tenders were awarded over the past three years.

In 2017, Posta posted a Sh1.5 billion loss, even as the Auditor General’s report showed that Kagwe had been paid millions in travel allowances.

The corporation is experiencing serious cash flow problems and has been unable to dispatch parcels and packages as well as pay for utility services.

According to Okwaro, Posta has reportedly been using clients’ money to run key functions of the organisation.

“This has caused the withdrawal of Kenya Power and Nairobi Water payments from our business resulting in loss of revenue. We must negotiate contracts such as Huduma Centres,” he said.

Acting PMG

Okwaro also wants a financial audit done to show why debt owed to creditors by the corporation has accumulated to Sh3.7 billion.

Yesterday, it emerged that ICT Cabinet Secretary Joe Mucheru who extended Kagwe’s term for three years on Monday, had ignored three names forwarded to him by the Posta board to replace the PMG.

Mucheru has defended his decision saying he was following board recommendations which approved extension of the embattled PMG’s tenure.

Thee board had shortlisted Corporate Secretary Julius Opini to serve in Kagwe’s position in acting capacity until a substantive PMG is named. Others nominated were Peter Korir (General Manager Finance) and Milka Mugwe, General Manager in charge of mail.

An internal audit at the corporation revealed that Posta is haemorrhaging millions of shillings through irregular sales and leasing of its facilities to private businesses, often at throw-away prices.

Records show that more than 40 assets spread across the country have been rent to individuals, some for as low as Sh1 per square foot, way below the average market rate of Sh60 to Sh80.

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