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Leaked:Faulu Micro-finance plot to defraud widow

The past four years have been a living nightmare for Alice Wanjiru Wamwea, a 70-year-old widow as she fights a bank to stop it from taking over her lifetime investment.

The widow recalls how she made sacrifices to buy a property situated in Josaga, Huruma area in Nairobi in 1991 from Jason Mwangi at a cost of Sh16 million.

Faulu CEO is Peter Mwangi. Other directors are Peter Muthoka, George Maina, Peter Gachuba, Muiru, Catherine Kimura, Sophia Mukoba, Nkiroto Njiri and Apollo Njoroge.

The property comprises a three-storey building which, using her resources, she added four more storeys.

Things were going on well for her until 2013 when she charged the property and took a loan of Sh65 million from Faulu Microfinance Bank to make finishing touches to the building.

CEO Mwangi

Wanjiru, in a petition to Central Bank of Kenya governor Patrick Njoroge dated May 23 2017, states that she took a loan of Sh25 million on August 21 2013 and then on March 21 2014 took another loan of Sh25 million, bringing the total to Sh50 million.

As a good corporate client, the bank did not hesitate to loan her Sh15 million on May 29 2015 since she had promptly repaid the first two loans.

Faulu Microfinance then treated her with respect and courtesy since she was one of their top clients repaying their loans promptly.

But matters took an ugly twist after she took the third loan after Faulu Microfinance Bank took control of the rental income from the building as per the Deed of Assignment dated March 10 2016.

The bank was therefore supposed to account for all the rental proceeds collected and to give her statements on the loan repayment status.

Her problems started when the Ongata Rongai Faulu branch relations manager, where she had her account, was transferred to Thika.

The widow, in her petition drawn by lawyers, Mutembei Chabari and Company Advocates, states that the said manager was handling her with professionalism and respect and she had become accustomed to him for the call of duty.

The widow’s efforts to convince the bank to transfer her account to the manager’s new Thika station fell on deaf ears.

It is at this juncture that the bank refused to give her statements to show how it was collecting the rental income and loan repayment status.

At one time, Wanjiru discovered that the bank had erroneously debited Sh6 million which she notes, exposed the interference of her account by some crooked bank officials who were keen to defraud her of her lifetime investment.

“The bank has adamantly refused to issue me with monthly bank statements detailing loan repayment schedule despite them using the rental income in offsetting the loan. Even after protesting to the bank on several occasions nothing was forthcoming,” she states in her petition.

She says her relations with the bank became so sour that they started handling her in unprofessional manner.

“On several occasions I would receive calls to go and sign documents without them explaining the contents thus no due diligence was accorded. In 2016 I received a call from one of the bank officials to go and sign documents. I was forced to sign the letter only to know the contents of the letter after I received a call from one of the bank officials stating: ‘Why did you sign the letter selling your house, how stupid are you?’” she says.

In her petition, Wanjiru states that in 2015 she approached Cooperative Bank to take over the charge from Faulu.

She adds that upon request from the Cooperative Bank on the outstanding balance, Faulu verbally told her to deposit Sh1.5 million being the accrued unpaid monthly loan instalment.

She avers that she deposited Sh2 million in her account but after the payment and signing the letter of offer by Cooperative Bank, Faulu officials cut communication with her.

She accuses Faulu of maliciously having her listed at the Credit Reference Bureau to dissuade Cooperative Bank from taking over her loan.

“I believe Faulu Bank officials were involved in having my name listed on the Credit Reference Bureau and have all along been hatching a plot to interfere with my account by debiting figures and not accounting for the rent collected, a move to have me among the loan defaulters,” she states in her petition.

She adds that on December 21 2016, Faulu placed an auction advert for the property to recover Sh73 million but ironically at CBR they indicated her outstanding debt was Sh7 million.

In the petition Wanjiru asserts that she believes her account was manipulated by bank officials.

And on March 19 2018, the banking fraud investigation department through Ngatia Iregi wrote to Faulu Microfinance Bank to demand answers to the queries raised by the widow.

“I am making reference to your letter dated 26th February, 2018 and the complainant’s letter dated 6th February, 2018, which are the subject to the above quoted inquiry,” Iregi stated.

He concluded: “In summary these are some of the irregularities highlighted: There was no loan statement with running balance provided and instead a feeder account was supplied. A loan statement with running balance will facilitate easier understanding of the amount paid and the balance thereof. 2. Repayment schedule clearly indicating monthly instalment, breaking principal and interest for the entire loan was not provided. If availed, it would facilitate breakdown of principal payment and interest.”

And on February 13 2018, the BFID sued Faulu over the irregularities.

In an affidavit sworn by Gerald Kanyithia at Milimani Law Courts in miscellaneous application 451/2018, Kanyithia stated he was undertaking investigation on the widow’s complaints.

“That this honourable court be pleased to issue a warrant to investigate account to the applicant, to enable Kanyithia have access and obtain information and carry away documents relating to bank transactions in respect of Faulu,” his lawyer stated.

The court ordered Faulu Microfinance Bank to allow the investigator to access the documents he asked for.

The investigations led to the arrest of Mwugweru Mwangi, Kefa Onsongo, Waweru Maina, Mwangi Njuki, Esther Muthoni Njoroge and Mboya Jaseme on August 18 2019.

They were charged with forgery alongside Oksana Investment Supplies Limited and Antique Auctions Agencies.

They were charged with conspiring to defraud Alice Wanjiru Wamwea by means of fraudulent auction of her property worth Sh150 million.

The widow in civil suit no 86 of 2016 had moved to stop Faulu and Antique from auctioning her property.

But Oksana Investment, which claims to have bought the property, filed civil case no E121 of 2018 to counter Wanjiru’s case.

But on July 12 2019, the widow through her advocate protested the filing of the suit by Oksana arguing there was a similar pending case she had filed.

On July 24 2019 Lady Justice Mary Kasongo ruled that an audit of the property rent income be carried out.

But on July 24 2019, the widow filed a notice of appeal on the ruling delivered by Justice Kasango. The appeal is pending.

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