What the OKOA Diaspora FEP investors told the CS of Foreign Affairs
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 exiting venture 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 chair Eng. Erastus K. Mwongera FIEK, RCE, CBS, Prof. Agnes Mwango’mbe EBS, Bishop Mark Kariuki, 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 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, Tours, and they were on the way to having a bank. For those who were experienced or had studied business we started feeling uncomfortable because of this rapid expansion, however Mr. Kithaka was back in the Diaspora to sell more shares this time around saying the emphasis was on 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 and that the value of the shares we had bought for KSHS 210,000 had raised to almost KSHS 400,000. More people came in and the 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 and one could buy a fraction, half, quarter, 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 starting of the discomfort.
The first AGM for 2013 was done early 2014 and the diaspora investors who were present were shot down when they asked questions, least did they know that the plans had been developed to shoot down any opposition just like we learnt later that’s a common practice with many public institution during AGMs. However the report was full of confusion and unexplained issues, which we were not able to follow because 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 and 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 also 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 2.3Billion.
Late 2012 we learnt that Central Bank could not license a bank to the FEP group holding, so the 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 word that the company was broke it was going left, right 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. No money came and the money was never recovered plus the 40% in the freeze had been spent. So for the bank application to be launched again to the Central Bank the PPO money had to be used.
FEP has lost so much million in payout for services and goods to companies owed by the top managers or their family members through inflated prices and unnecessary projects. There has been unnecessary employment that did not add in productivity, lavish life style by top managers, office moving from one location to another and many conflicts of interest by the CEO and his group. This led to issues of transparency, creditability, and integrity. All the companies in the group all made losses except for the FEP Sacco which also had decreased its profits from previous years.
Your Excellence, this comes at a time that our President Uhuru Kenyatta has been on the forefront encouraging the Kenyan diaspora to form enterprising institution that will harness their collective financial strength and be able to leverage on 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 on 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 5Billion in investments.
The failure of FEP will kill the core fiber in which we have been trying to build for the longest and it will be almost impossible to rebuild trust of institutions which are the best avenues to our way forward. The Kenya government acknowledges and embraces the economic contribution of the diaspora remittance. Currently FEP employs over 500 people, and with proper management we were anticipating creating 5,000 jobs in five years. It’s the high time the government stepped in to safeguard this investment and restore the faith.
Your Excellence it our humble request, your good office to let the government of Kenya know of this fear. A company with over 7,000 diaspora investment mainly Kenyan Americans is endangered by mismanagement in Kenya. President Obama first task in office was to revive the motor industry which was collapsing then, 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.
Capt. George N. Njue
On behalf of FEP USA INVESTORS FORUM.
-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.