Members of the troubled Metropolitan National Sacco have resolved to engage forensic auditors to unearth financial wrongdoings that have pushed the once profitable teachers’ sacco into insolvency.
Reports tabled at an annual general meeting (AGM) of the sacco on August 30, 2025, revealed untraceable loan book asset of Sh50 billion and a negative shareholder equity of Sh12 billion-- signaling more trouble to shareholders should the institution be liquidated.
Negative shareholder equity occurs when a company's total liabilities exceed its total assets. This situation can arise from, among others, persistent losses, heavy debt accumulation, and high dividend payouts.
Prolonged negative equity can be a red flag, potentially signaling that the company is headed towards insolvency or the inability to pay its debts. It means that after all debts are paid, there would be nothing left for the shareholders.
The meeting also adopted the proposal for a forensic audit that requires specialised examination of the sacco’s financial records and transactions to detect financial wrongdoing such as fraud or embezzlement of funds.
“The meeting discussed the financial status of the sacco, highlighting a significant untraceable loan book asset of 50 billion shillings and a difference between assets and liabilities of 12 billion shillings. The proposal for a forensic audit was appreciated, with resources to be mobilised for the exercise,” said resolutions from the meeting seen by Business Daily.
“The meeting also approved the appointment of independent external auditors for the financial year ending December 31, 2024,” it further stated.
The AGM noted that the sacco’s challenges still remain, including insufficient liquidity, negative member funds, and loan defaults.
“The meeting discussed the financial status of Metropolitan National Sacco, highlighting a negative equity position due to historical obligations. The board and management presented a revival strategy focusing on recovering lost funds, activating non-performing loan portfolios, and strengthening governance,” according to the meeting highlights.
This comes amid a looming court battle over constitution of the sacco’s current board members and the legality of an AGM that was conducted electronically on August 30.
A shareholder has filed a petition challenging the legality of the meeting and its resolutions.
The matter is scheduled for mention and further direction on September 17.
The Commissioner for Co-operatives, David Obonyo, and the Metropolitan Sacco Chief Executive, Cyrus Kariamwere, were not available for comments by the time of going to press, as our calls and text messages to their cellphones went unanswered.
In February this year, Mr. Obonyo said the Sacco required at least Sh7 billion, an equivalent of the amount looted by the former Sacco officials through fictitious dividend payments, to resume normal operations.
He said the recovery of these funds, which has been slowed down by the court process, is key to the revival of the Sacco that draws its membership from teachers and civil servants.
In June, the High Court dismissed a petition by former officials of the Sacco challenging the investigations that unearthed financial irregularities at the entity about three years ago.
Lady Justice Aburili Roselyne Ekirapa dismissed a petition by the former Sacco officials on May 21, 2025, and directed them to pursue their grievances through the appellate mechanisms provided under Section 74 of the Cooperative Societies Act.
This effectively allowed the Commissioner for Co-operatives to freeze the assets of the officials in an attempt to recover the funds looted from the Sacco.
In 2023, Obonyo issued notices of surcharging the senior executives of the Sacco in court over the misappropriation of Sh7.2 billion through fictitious dividend payments.
The Sacco officials filed a petition requiring the court to quash the inquiry order dated April 20, 2022, for the dissolution of the management and supervisory boards of the Sacco, including all administrative actions, decisions, or measures initiated by the Commissioner of Cooperatives, hinged on the disputed inquiry report.
