Ref: Kenya Diaspora Investment in Fountain Enterprise Program (FEP) based In Nairobi (Kenya)
On behalf of FEP investors based in USA (about 7,000) we bring you greetings.
Allow me your Excellence to give you a brief history of our investment in FEP group. It all started in 2011 when we received Mr. John Kithaka to the USA. In North Carolina he was escorted by Rev. Kaimatheri from Atlanta Georgia (who was known to some of us through his work in the church) and Ms. Mary from Kenya. We had received information of a new investment opportunity in Kenya through friends & relatives from England.
As usual, the Kenyans in the diaspora are always eager to receive and hear good news from our motherland. We received the trio and hosted them in our homes as we listened to what they had to say of the venture. One of the most exciting ventures was to establish a bank. Though with hesitation, because of our previous experience of being taken for rides and losing lots of money, many of us bought into the idea.
The difference this time around was the senior men & women of integrity that were said to be behind the venture. In the advisory council were Chairman Joseph Kaguthi EBS, V/C Prof. Francis Gichaga EBS, Bishop Lawi Imathiu, Late Arch Bishop Dr. David Gitari, Dr. J.S. Mathenge, Prof. Rosalind W. Mutua, Amb. Dennis Awori, Dr. Agnes Abuom, among others. The group holding board was chaired by Eng. Erastus K. Mwongera FIEK, RCE, CBS. Prof. Agnes Mwango’mbe EBS and Bishop Mark Kariuki were also part of it, among others. Further to this, the venture was said to be Christian-based. This was confirmed by a good number of bishops. With all these credentials, this made many believe, and they invested between KSHS 360,000 to 500,000.
At the beginning of 2012, there was a lot of publicity on how well FEP was doing. They had already established companies in Security, Schools, IT, Media, Hotels, and Tours. They were on the way to having a bank. However, for those who were experienced or had studied business, we started feeling uncomfortable because of this rapid expansion. Mr. Kithaka was back in the Diaspora to sell more shares. This time around, he emphasized more people than money. The shares were now going for KSHS 210,000. After the exercise, the number of investors rose to almost 1,500.
The year did not end before he was back to the diaspora and talked of the tremendous success. The value of the shares we had bought for KSHS 210,000 had raised to almost KSHS 400,000. Consequently, more people came in, and the investors hit over 3,000. Then came early 2013 when it was said, due to outcry that many investors in Kenya could not raise the amounts, the shares were split. Thus, one could buy a fraction, half, quarter, or even an eighth.
This was extended to the diaspora, and the number of investors rose to over 4,000. Some people from the diaspora were even hired to go and work in Nairobi, which built even more confidence. However, this team did not stay long because they differed with the way the company was being managed. Any attempt to rectify the day-to-day operation and choice of venture was met with lots of resistance, and some were let go. This was the start of the discomfort.
The first AGM for 2013 was conducted early 2014, and the diaspora investors who were present were shot down when they asked questions. Least did they know that plans had been developed to shoot down any opposition just like we learned later that’s a common practice with many public institutions during AGMs. However, the report was full of confusion and unexplained issues, which we were not able to follow. The issues on the report had been passed. Since then, a lot of information has been leaking from the investors in Kenya, who also acknowledge they did not see much of what had been promised.
The company did a PPO last year. The process carried on in which the Capital Market Authority (CMA) says it did not know, and they were not consulted, hence illegal. This is confirmed by the fact that most of the PPO marketing and pressure was on the diaspora, away from the eyes of the CMA and the government. This targeted new investors who saw an opportunity to join the company. It’s important to note the states and cities targeted were where the company was not well known. Because the area where there was growing doubts & concerns they avoided. The PPO exercise increased membership to about 7,000, and the company claimed to have raised about KSHS 2.3 Billion.
Late 2012 we learned that Central Bank could not license a bank to the FEP group holding. So 40% of our investment was removed and kept for the bank, as we were told it was in the freeze. Before the PPO, there was a word that the company was broke. It was going left, right, and center, looking for money. There is proof that KSHS 10 Million was paid out to a firm that promised to bring in some investors from the east. However, no money came, and the money was never recovered. Plus, the 40% in the freeze had been spent. Therefore, for the bank application to be launched again to the Central Bank, the PPO money had to be used.
FEP has lost many millions in payout for services and goods to companies owned by the top managers or their family members through inflated prices and unnecessary projects. There has been unnecessary employment that did not add to productivity, lavish lifestyle by top managers, and office moving from one location to another. Many conflicts of interest by the CEO and his group also arose. This led to issues of transparency, credibility, and integrity. All the companies in the group made losses except for the FEP Sacco, which also had decreased its profits from previous years.
Your Excellence, this comes at a time when our President Uhuru Kenyatta has been on the forefront encouraging the Kenyan diaspora to form enterprising institutions. These institutions will harness their collective financial strength and be able to leverage them as a unit. This will grow their individual finances and also grow our country’s economy. It would also create a structure in which the government can partner with a public/private partnership. Many of us believe that it would be devastating to the diaspora if FEP fails due to the number of investors, about 7,000, and about Ksh 5 Billion in investments.
The failure of FEP will kill the core fiber we have been trying to build for the longest time. It will be almost impossible to rebuild trust in institutions, which are the best avenues for our way forward. The Kenyan government acknowledges and embraces the economic contribution of diaspora remittance. Currently, FEP employs over 500 people. With proper management, we were anticipating creating 5,000 jobs in five years. It’s high time the government stepped in to safeguard this investment and restore faith.
Your Excellence, it is our humble request to let your good office know this fear to the government of Kenya. A company with over 7,000 diaspora investments, mainly Kenyan Americans, is endangered by mismanagement in Kenya. President Obama’s first task in office was to revive the motor industry, which was collapsing then. This effort is a legend the American people will forever cherish.
We humbly request for:
- The Kenya government to launch investigations in the financial management of FEP since it started collecting money from the public in 2011.
- The government to ensure all regulatory & supervision are in place and being followed, to safe guard the public funds.
- To ensure transparency and professionalism in the running of the company.
- Ensure all the property (moveable and immovable) are secure and accounted for. Proper identification & registration of all property like land, vehicles etc. We have land worth close to KSHS 3Billion.
- Establish true ownership, who owns what % and a complete list of investors (information memorandum).
- Assist in facilitating the licensing FEP bank in Kenya, and look for ways and means of establish a Kenyan diaspora bank in USA in collaboration to the Kenyans in the diaspora.
A task force has been formed in every state to pursue this very urgent agenda and will be ready to meet with you or respond to any clarifications or concerns.
We look forward to hearing from you soonest.
Yours faithfully,
Capt. George N. Njue
On behalf of FEP USA INVESTORS FORUM.
Tel: 9196125893
Email: captainnjue77@gmail.com
Cc
-Principal Secretary Ministry of foreign Affairs & international Trade
Dr. (Eng) Karanja Kibicho
-Mr. Charles Kabaiku-Global FEP Diaspora Forum Representative in Kenya
-Dr. Joe Karogi- FEP Diaspora Advisor
-Mr. Michael Karuu-FEP Diaspora CEO
-Mr. Joseph Kaguthi- Chairman FEP Advisory Council.
