Safaricom surrenders Sh500m to unclaimed assets agency

Telecoms operator Safaricom is set to hand over Sh500 million to the Unclaimed Financial Assets Authority (UFAA) in a move that will push the agency’s total cash holdings to Sh2 billion barely a year since it was established.

Safaricom said the money is from idle deposits in its popular mobile money platform M-Pesa held in phone lines that have been inactive for more than two years.

“M-Pesa deposits are about Sh500 million but we are still computing airtime balances and uncollected share dividends,” said Safaricom chief executive Bob Collymore.

The list of contributors to Safaricom’s unclaimed assets cash pile includes money left in lost phone lines that have not been replaced and those belonging to people who have left the country.

Safaricom is handing over the money in compliance with the unclaimed assets law which requires companies, banks and utility agencies to surrender any assets that have been lying idle in their possession for periods defined by the law.

The law requires such companies to look for bona fide owners of the assets or rightful successors in cases where the owners are deceased.

But for companies like Safaricom, the sheer number of assets they are dealing with has made it difficult to launch an effective search for the asset owners through conventional means such as publication of the names in local newspapers.

The M-Pesa money has, for instance, accumulated in small amounts left in millions of accounts with the telecoms firm.

Safaricom said dependants of deceased persons can still claim the funds if they provide proof of death and an administration letter granting them powers over the deceased’s estate.

READ: Unclaimed assets agency puts companies on notice

Upon receiving the money, the authority is expected to launch a fresh search for owners of the assets or their heirs where they are deceased.

The Unclaimed Financial Assets Act mentions mobile money but the authority said it was relying on powers accorded to the Cabinet secretary to include new asset classes not covered in the law.

“Safaricom should hand over that money to the authority because M-Pesa deposits are a financial asset,” said Vincent Kimosop, who chairs the authority.

Yu Cash the mobile money platform for Essar, the operators of Yu Mobile network, has submitted Sh23 million to the authority. Essar is in the process of exiting the Kenyan market.

The authority has received Sh1.5 billion worth of unclaimed assets from 19 banks, East African Breweries (EABL), Nation Media Group, Rea Vipingo, Unga, Deloitte and Kenya National Assurance among others.

Standard Chartered Bank has surrendered the highest amount (Sh537 million) followed by Kenya National Assurance (Sh348 million). EABL has submitted Sh306 million from unclaimed share dividends.

READ: Banks surrender Sh900m to unclaimed assets agency

Standard Chartered also stands out as the only company that has identified the sources of the assets it handed over to the agency. The list shows that Sh362 million originated from cash held in deposits, Sh1.4 million from salary arrears and Sh132 million from unclaimed dividends.

The authority said it has so far invested Sh1 billion of the funds in Treasury bills and kept the rest in a custodial account at the central bank.

This is the first time that companies are submitting assets to the agency which is still setting up administrative structures following enactment of the law establishing it two years ago.

The agency’s first chief executive officer, Kellen Kariuki, was expected to report to work on Monday and is expected to launch a fresh search for owners or beneficiaries of unclaimed assets as required by law.

Ms Kariuki worked with Citi Bank for more than 20 years, rising to senior positions, including that of chief financial officer. She also has to raise compliance levels among the holders of unclaimed assets that remain low.

“Saccos, insurance companies, retail outlets, postal corporation and utility companies are some of the entities that have yet to comply. Section 37 of the Act covers penalties for non-compliance,” Mr Kimosop said.

Retail outlets are expected to hand over unclaimed gift vouchers to the authority while utility companies are to surrender unclaimed service deposits.

It has also emerged that the authority is lobbying the Institute of Certified Public Accountants to demand disclosure of unclaimed assets as part of liabilities in financial statements.

Parliament is yet to pass regulations that give the agency more powers to demand surrender of funds from non-compliant companies.

The authority has powers to conduct forensic audits on target institutions to ascertain full compliance. Chief executives are required to sign the assets reports making them liable for any misreporting.

The list of unclaimed assets includes bankers cheques not cashed for two years and contents in safe deposit boxes unclaimed for more than two years.

Matured life insurance policies unclaimed for more than two years and shares, whose dividends have not been collected for more than three years, are also in the list.

Unclaimed Property Asset Register, a private company, estimates that Kenya has unclaimed assets worth more than Sh50 billion.

A recent survey by the company found that 56 per cent of the assets are held by banks while 22 per cent are with insurance companies.

Unclaimed funds are expected to be deployed in the financing of public infrastructure through investment in government securities that pay a return. This gives the board the ability to pay back any claims made in future with an interest.

Some government institutions are already eyeing the funds to support their operations. The Higher Educations Loans Board, the agency that finances higher education, is targeting 60 per cent of the cash to help it meet the needs of the growing number of university students.

UFAA is expected to contract fund managers and custodians to manage the funds on its behalf but the law contemplates infrastructure projects to be the main beneficiary of the idle funds.