Unclaimed assets: Families wallowing in poverty as their millions lie idle

Joe Ngige’s father died in June 1991. After going through the mourning and estate administration procedure, life returned to normal.

And then, a few years later, his brother stumbled upon a banker’s debit note instructing the bank to pay a policy premium for their father.

The brothers contacted the insurance company and after the necessary get-to-know-you, the policy was paid without undue delay.

But a curious Ngige asked himself why the insurance company had not contacted the family? The answer: Change of address. The old man had used his job address and as he moved through the various stages of his life, he forgot to update the address.

In that instance, Ngige’s mind flooded with thoughts of other unclaimed assets – dormant bank accounts, unclaimed dividends, etc. There and then, he and a friend registered the Unclaimed Property Assets Register (K) Ltd, of which he is the Chief Executive Officer.

What, he wondered, happens to those families whose breadwinners invested well but do not know how to start tracking their financial assets upon death.

Ngige embarked on a journey of discovery. He came upon many stories, but the following one will no doubt open the eyes of an untold number of Kenyans struggling hard to stay alive today.

As part of his research, Ngige went to a top financial institution and sought samples of dividends returned as unclaimed from the Post Office to which they had been sent.

ORIGINAL OWNER

In this case, the original owner of some company shares was a colonial farmer in Eldoret who, upon his return to England, bequeathed them to one of his servants.

Not knowing what shares were, and much less the company in which he was now a part owner, this new shareholder simply placed the share certificate in his suitcase together with old letters and other documents.

When he died, his family moved back to their ancestral home in Karatina, Nyeri County, where they resigned themselves to a squalid life. Ngige was able to trace the dead man’s son through the local assistant chief.

It took a great deal of persuasion by the assistant chief to convince the elderly man of the authenticity of Ngige’s story. When it was made clear that no money would be required of him and that his bus fare would be paid, he agreed to go to Nairobi in the company of his son to claim his shares.

Says Ngige: “The man found that the shares were, through various splits and accumulated dividends, now worth Sh12 million. His life and that of his family changed instantly. Because of this inheritance their housing improved, and they have invested in dairy and other income-generating projects. Even the lives of their neighbours have changed.”

Using this story as an example, Ngige advises Kenyans: “People who believe their forebears invested in banks, shares or other assets should make use of the Unclaimed Financial Assets Authority (UFAA) to trace investments that might have been made.

They should take advantage of this initiative to ensure that their family wealth gets to the second, third and fourth generations.”

In 2008, a survey by a government task force put the value of unclaimed assets in Kenya at Sh9.1 billion.

But it added a rider that this figure was far below the reality on the ground. It attributed this to a number of factors.

The main ones were exclusion of non-financial assets such as land and property, significant under-reporting by the holding institutions surveyed — particularly in the pensions and insurance sectors — and non-reporting of unclaimed assets by government agencies such as the Public Trustee. Most significantly, mobile phone money transfer providers, who have since become major players in the banking sector, were also not included.

UNCLAIMED ASSETS

Unclaimed assets that featured in the report were mainly in the banking, insurance and capital market sectors.

Of this total, banks reported Sh7.4 billion, listed companies, Sh1.5 billion, insurance companies, Sh283 million while the National Social Security Fund (NSSF), which falls within the pensions category, reported Sh243 million.

The Kenya Power and Lighting Company (KPLC), which was categorised within utility firms, reported a total of Sh66.8 million.

This comes mainly from customers who do not claim their electricity deposits on closing their accounts.

On October 31, 2014, the UFAA, which came into force by an Act of Parliament in 2011, published a notice requiring all the holders of unclaimed assets to fall into line with the law and surrender such assets to the authority.

Quoting Section 20 of the UFAA Act, the authority’s notice prescribed the manner in which such assets would be surrendered to its account at the Central Bank of Kenya.

Mr Vincent Kimosop, the UFAA chairman, says that six commercial banks have already complied with the notice. They are Prime Bank Ltd, Fidelity Commercial Bank Ltd, Oriental Commercial Bank Ltd, UBA Kenya Bank Ltd, Standard Chartered Bank Ltd and Victoria Commercial Bank Ltd. In the insurance sector, the Kenya National Assurance Company (2001) has complied.

Says Mr Kimosop: “It is in their interest to comply with the Act, since by doing so, they are also serving their clients.”

Many Kenyans don’t know what their government classifies as unclaimed assets. They also do not know after what period an asset becomes unclaimed.

TRACE ASSETS

They are thus poorly positioned to make a claim on what is rightfully theirs.

Mr Kimosop says public education would form a core activity of the UFAA, whose entire mandate is to trace such assets on their behalf and keep them in trust and finally pass them on to their rightful owners.

Where this cannot happen, for whatever reason, the mandate of the authority is to invest them for the public good.

It is a monumental task in a country famous across the world for corruption. Mr Kimosop is aware of the task ahead and remarks: “Not every Kenyan is corrupt.

“Not all the institutions are riddled with corruption. It is possible to serve the public without pursuing self interests. Mr Kimosop, who is the CEO of the International Institute for Legislative Affairs (ILA), previously worked at Transparency International (Kenya).

The secretary-general of the Consumers Federation of Kenya, Mr Stephen Mutoro accused financial institutions of profiting on the back of unclaimed funds instead of surrendering them to claimants.

“It is legally and morally wrong for banks and other financial institutions to continue holding assets that belong to deceased persons.

It is a criminal act for such institutions to use the funds to re-invest and even declare profits while they make it impossible for the next of kin to access the funds.”