CBK move exposes dirty deals at FEP

CBK move exposes dirty deals at FEP

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The move by the Central Bank of Kenya to deny Fountain Enterprises Programme to acquire 25pc stake in Credit Bank owned by retired politician Simeon Nyachae has generated interest in its operations. FEP runs a Micro Finance Bank and was given the licence by the NGO board which is mandated to do so but not Central Bank. The CBK move to deny Fep shares in Credit Bank has opened a can of worms and has now exposed its dirty deals.

Investigation reveal that CBK has been secretly monitoring Fep’s operations for years and based on the findings, CBK strongly believes it does not have ethics to buy shares in any bank and even operate a micro finance.

Fep claims to have an asset base of Sh4.4 billion with a number of companies in major sectors.

The group’s founder CEO John Kithaka resigned last month under unknown circumstances but sources say he has been on the state intelligence radar and that his resignation was to evade the dragnet. The new CEO is Maurice Korir.  Kithaka is linked to money laundering which is an economic crime.

This comes barely a year after Kenyans in the US lamented that the Fep Group was giving them a run around when it comes to how their investments are handled. Sources say many have claimed that they have tried to reach top management to address their concerns but they seem to be getting taking them in rounds. Some have cited misrepresentation of facts to the point of being coerced to invest their money into non-existent projects. Majority of them have not received their certificates for the shares they purchased in 2012 and title deeds for land procured several years ago. The investors have raised eyebrows on Fep audited financial reports. Controversy surrounds Lukenya properties the cost value, number of plots sold and current market value. Then there is the issue of the number of companies owned by Fep and how many are in operation and status of those out of operation has been raised. The percentage of ownership and any MOU for any existing partnerships has been at the centre of discussions by members. Initially, Fep Bank was to be started and the 40pc of founder shares allocated to banking according to the CEO’s presentation but nothing has happened bit only a move to acquire shares in Credit Bank to emerge. Further, Fep has failed to honour the leader’s remuneration package as stipulated and investors want compensation for expenses incurred on travel, hotel reservation and other related cost.

The Fep management team members are Anthony Ng’ang’a (group finance manager), Bernice Muya (group legal and regulatory affairs manager), Joshua Waringo (head of procurement), Judy Kinyanjui (group human resource and admin manager), Patricia Mwita (group marketing manager), Richard Ronoh (group investor relations manager), Shelmith Mugoh (divisional head – real estate, security, hospitality and education) and Susan Ngalwa who is the group investment and project manager).

The group’s board is chaired by Erastus Mwongera while other board members are John Kithaka who is the founding chairman; Wachira Ngaru is the vice-chairman, Bishop Mark Kariuki, Agnes Mwang’ombe, Margaret Chemengich, David Tamki, Joseph Wambugu and Sarah Olembo.

The chairman of the advisory council is former Nacada chairman Joseph Kaguthi while the vice chair is Francis Gichaga, a former vice chancellor of the University of Nairobi. Other council members are Agnes Abuom, Rosalind Mutua, Lawi Imathiu, Samuel Limo, Joe Karogi, James Mathenge and Denis Awori.

Investigations reveal some of the companies owned by Fep are also not doing well due to boardroom wrangles, tribalism and nepotism. They include Fep insurance agency, Fountain Credit Services which is credit microfinance. Investigations reveal that it has not been doing well and customers have been complaining of poor services including claims that it takes long to approve and disburse loans both to groups and individuals.

The group also runs mobile money transfer MobiKash which is also said to be performing poorly. MobiKash Kenya is fully owned by Fep Holdings Limited.

Others are Citadelle Security which began operations in Kenya in 2010. It was started as a guard company in Nairobi and later expanded into offering electronic security and personalised guarding services. They also offer CCT services, mobile tracker, intruder alarms, metal detectors, electric fencing and manufacture of electric gates.  Apart from Nairobi, Citadelle Security operates in Nairobi, Mombasa, Nakuru, Uasin Gishu, Meru, Kerugoya and Nyeri while their main clients are Safaricom, LinkSoft and Standard Gauge Railway. Fep also runs the Kisima Real Estate which deals in sale of land and serviced plots, property development and sale of residential houses, acquiring land for disposal, commercial and residential property management and agency services. Fountain Technologies is also a company run by Fep and deals in the provision of telecommunication, energy and civil engineering works with the Rural Electrification Authority, Nokia and Kenya Power as the major clients. Fep holdings run two private schools namely Fountain School, Tigoni and Fountain School Mwea. It also runs a Kindergarten and primary school.

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