SIC Investment Co-operative CEO Churchill Winstones has exited the organisation amid months of delays in settling claims from customers who invested millions of shillings in the society’s fixed deposit product.
The exit of Mr Winstones late last week marks the latest reorganisation in an entity that, in June this year, parted ways with the entire board and replaced it with a new one on an interim basis. The new board was confirmed in September.
Mr Winstones becomes the second CEO to exit SIC in under four years. Sarah Wahogo served as CEO from March 2022 until early last year, after which then finance manager Stephen Mbugua took over on an interim basis, before Mr Winstones was recruited.
He leaves as the co-operative, which formerly traded as Safaricom Investment Co-operative, is struggling to repay customers who invested millions of shillings in the Pepea Fixed Deposit product that was offering them annual returns of up to 12 percent.
Several customers who invested at least Sh4 million each in the Pepea Fixed Deposit told this publication that their investment matured but SIC has been postponing making the payment, citing liquidity challenges.
SIC head of finance Jared Odhiambo, who is now the acting CEO, confirmed the liquidity challenges but said the organisation has been gradually settling the amount and plans to pay off all investors by the end of March next year.
“We had liquidity challenges because many customers were coming for their money earlier than we had anticipated. However, we have a robust plan now and we continue to settle the investors. We should be done by the end of March next year,” said Mr Odhiambo in a phone interview.
He added: “We are now in a good place. You will see us restructure this product in the coming days to tie it to specific projects.”
Information in the annual report for the year ended December 2024 shows the co-operative was hit by Sh380 million unexpected requests from customers to pull out of the product, triggering the liquidity problems.
“A bank run on the Pepea Fixed Deposit, leading to a Sh380 million payout to investors, which strained our liquidity,” said the firm in the annual report.
It is not clear what prompted many customers to come for their money earlier, in a development that has come to impact those who held theirs to maturity. The co-operative’s annual report shows interest on the Pepea product was Sh48.95 million in 2024, up from Sh40.35 million in the previous year.
Information on its website shows SIC started operations in 2009 and has attracted over 5,300 members, partly drawn from the current and former staff of Safaricom PLC. The principal activities of the society are investment in real estate, marketable securities and private equity.
SIC describes the Pepea Fixed Deposit as an “exclusive product” offering what it calls “lucrative and competitive rates in the market, second to none.” The minimum investment is a one-off Sh50,000, locked in for a period of between six and 12 months.
Investors who place between Sh50,000 and Sh500,000 earn returns of 10 percent and 10.5 percent for six-month and 12-month tenures respectively. Returns rise to 11.5 percent and 12 percent for investments exceeding Sh3 million.
Investors who withdraw their funds before maturity forfeit all accrued interest. SIC had also promised that investors who hold their deposits to maturity would receive their principal and interest within 10 days.
SIC had to restate its books of accounts for the year ended December 2023 to correct several misstatements. The restating of books reduced the SIC’s retained earnings by Sh26.15 million.
Commissioner for Co-operatives Development David Obonyo said in an interview that he was not aware of any liquidity challenges at SIC.
This is despite some customers having written to his office, according to letters seen by this publication. Mr Obonyo said he would intervene in the matter.
