Police Sacco Seeks To Stop DCI From Probing Fraud Allegations

Police Sacco has moved to court seeking to block the Director of Criminal Investigations (DCI) from probing claims of embezzlement of funds against its board directors.

The deposit taking Sacco sought High Court through lawyer Cecil Miller to restrain the DCI or its agents from arresting or charging the officials or the continued harassment or questioning the Board of Directors, pending hearing and determination of the case.

The Sacco also sought orders to discharge directives issued by a Milimani magistrate court allowing the probe and for investigators to carry away certified copies various Sacco documents including list of the names of all members of the current board of directors.

The DCI through investigating officer Inspector Duncan Maina had obtained warrant to investigate Sacco records, list of all tenders awarded to the Police Sacco from 1st January 2019 to 30th October 2024.

The DCI was also allowed to obtain a list of corporate social responsibility projects implemented on the same period, Board of directors’ approval and all procurement documents relating to the purchase, installation and maintenance of the said M-Tawi system, audit reports among others.

“Unless this Honourable Court intervenes urgently, the Sacco will suffer irreparable harm, including damage to its reputation as a leading financial institution, potential breaches of its confidentiality obligations to its members and a potential “bank run’ which will lead to the collapse of the DCI,” Miller submitted.

Further, NPS DT Sacco wants the court to refer the complaint raised in the criminal application to the Sacco Societies Fraud Investigations Unit for investigation.

Court documents stated that in November last year, a magistrate ordered the Sacco CEO Solomon Atsiaya to nominate an authorized person to provide a certificate of production of electronic evidence under Section 106B(4) of the Evidence Act

The court further ordered that an authorized person be nominated to provide a witness statement as evidential account in support of the documents given to the DCI.
The Sacco, however, argues that the inspection of the Sacco’s documents falls within the mandate of SASRA, under Section 48(2) and 49(1) & (3) of the Sacco Societies Act, which grants.

“The Sacco Societies Fraud Investigations Unit (SSFIU), established by SASRA in 2020, is mandated to detect, prevent, and address fraudulent activities within SACCOs,” the Sacco said.

Police Sacco submitted that there has been no compliance with sections 67 and 76 of the Sacco Societies Act CAP 490B as they offer a dispute resolution mechanism to be followed which has been bypassed by the current investigations.

” The Sacco’s rights to confidentiality and protection of its members’ personal and financial data under the Data Protection Act, 2019 are at risk of being breached, as the orders would lead to the unauthorized dissemination of sensitive information,” the Sacco added.

The Sacco argues that due to its sensitive nature being a deposit taking institution, SASRA was the ideal place to carry out the investigations, to protect depositors’ funds.

Through lawyer Miller, the Sacco argue that the order dated 28th November 2024 have far-reaching implications and expose the Sacco to potential operational disruption, financial instability, and erosion of public confidence and should therefore be discharged.
Atsiaya pointed out that Section 49 of the Act has equipped SASRA with the power to authorize inspections of SACCOs and issue directives where non-compliance is identified under Section 50 of the Act.

He added that via a letter dated 3rd September 2024, select members of the Sacco wrote to SASRA lodging a complaint therefore admitting the jurisdiction of SASRA as the investigating body.

CEO Atsiaya adds that due to the sensitive nature of deposit taking institutions, the power granted to SASRA is ideal for protecting depositors and should be therefore allowed to undertake this investigation as per section 49(1) of the Act.
“To allow investigations to continue as they are now will dangerously expose the institution and the depositors of the Sacco to grievous losses should the DCI proceed to effect the orders issued by court,” Atsiaya told the court.

He further state that SASRA’S oversight is critical to ensuring compliance with the prudential standards prescribed under Section 48(2) of the Act, and any deviation from this process undermines the statutory framework established to regulate SACCOS.

“The purpose of SASRA investigation is to safeguard the depositor’s interests and an investigation by the DCI will create a frenzy amongst the depositors causing a bank run,” adds Atsiaya.

Atsiaya adds that the complainants have not exhausted all remedies available to them under the doctrine of exhaustion.

He told the court he is well aware that the Directors of the Sacco are not immune or opposed to any investigations into the operations of the SACCO or their own conduct.

“The said directors of the Sacco are ready to submit to the investigations within the prescribed procedures under the Sacco Societies Act, CAP 490(B),” court heard.