Money being counted at a bank's teller point. Banks, pensions funds and insurance companies may lose up to Sh200 billion in assets held in custody for beneficiaries who cannot be traced if the government yields to pressure to seize the portfolio. Photo | FILE
Banks, pensions funds and insurance companies may lose up to Sh200 billion in assets held in custody for beneficiaries who cannot be traced if the government yields to pressure to seize the portfolio.
The International Institute for Legislative Affairs (IILA) has asked the government to quickly set up an unclaimed assets agency to regulate and manage the unclaimed assets following President Kibaki’s assent to a law allowing this three weeks ago.
“The overall universe of unclaimed financial assets in the financial system, the corporate sector and other institutions, including utilities, may exceed Sh200 billion,” said Emma Wanyonyi, a programme officer at the institute.
President Kibaki signed the Unclaimed Financial Assets Bill, which was sponsored by Laisamis MP Joshua Lekuton into law on December 1.
The Act allows the agency to take control of the assets and channel them into investments of social benefit like health, education and infrastructure.
Although the institute estimates the worth of the assets at Sh200 billion, a task force appointed by the government to establish their value only came up with Sh9.1 billion, based on returns by institutions in the banking, capital markets and insurance sector.
The task force, however, said the totals were ‘far below the prevailing scenario.’
In its report, the task force found that banks held Sh7.4bn, listed companies Sh1.5 billion, insurance companies Sh283 million, the National Social Security Fund Sh243 million and Kenya Power Sh66.8 million.
It pointed out that non-financial assets like land and property, significant under-reporting by holding institutions and non-reporting of unclaimed assets by government agencies like the Public Trustee as the reasons behind the variance.
IILA wants the Government to release an audited report on such assets in the country.
“This typically will entail the identification of unclaimed assets according to prescribed definitions as well as the segregation, reporting and remittance of such assets into a central reclaim fund,” she said.
She said the Government has to speedily take custody of the assets and where possible, return them to the rightful owners, including their next of kin.
In assenting to the law, President Kibaki bestowed on Kenya the international best practice in handling of third party monies by institutions that exercise fiduciary responsibility.
Malaysia, Ireland, Canada and the United States are some countries that have set up legal frameworks for managing the assets.
“It is only fair that the country now moves into a speedy implementation of this law to ensure that Kenyans can begin to enjoy its benefits,” Ms Wanyonyi said.
The Chairman of the Parliamentary Budget Committee Elias Mbau said that more than Sh200 billion had not been claimed over the years because of death of claimants, missing records, lack of asset tracking mechanisms and the absence of legal and regulatory requirements.
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