The Agricultural Finance Corporation, a State-owned Development Financial Institution (DFI) mandated to assist in the development of agriculture and related industries loaning farmers and entities in the sector.
The
Agricultural Finance Corporation (AFC) is on the spot for making loans to
a company and 13 customers based on forged title deeds, risking a loss of over
Sh45 million.
AFC,
a state-owned Development Financial Institution (DFI) tasked with assisting in
the development of agriculture and related industries by lending to farmers and
entities in the sector, is accused of failing to exercise due diligence in the
disbursement of funds, calling into question its internal controls and lending
framework.
The
Sh22.66 million AFC lent to 13 farmers in Kapsabet may not be recovered,
according to the Auditor-report General's on the corporation for the year
ending in June 2021, because the borrowers used fraudulent title deeds as
security and disappeared after receiving the loans.
“Information
available indicates that the corporation advanced the amount against various
collaterals in form of title deeds, which appeared fraudulent. The corporation
filed seven cases in court against the fraudsters and judgment was entered in
favour of the corporation. However, the corporation had not executed the
warrants issued as of June 30, 2021,” the Auditor-General states.
It
also states that internal correspondences at AFC reviewed the loans given to
the farmers down to Sh11.18 million as recently as January 20 this year.
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“The
circumstances under which the previously reported balance had been reduced from
Sh22.66 million by Sh11.4785 million were unclear and no explanation was
provided for audit review.”
The
Ethics and Anti-Corruption Commission took over the case for investigations,
according to the report, but the AFC has already said it will give up trying to
recover the money.
"The
corporation claims that it carried out an investigation on the traceability of
the fraudsters using its internal machinery through the regional and branch
offices.
Due
to their expiration, it is currently not possible to execute the aforementioned
warrants. The corporation is in a difficult position to apply for new warrants
because it cannot identify the individuals against whom they are supposed to be
executed, according to AFC, which also added that it has accounted for the
cases as bad and doubtful debts.
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The
Kenya Agricultural and Livestock Research Organisation is the real owner of the
company that received a Sh20 million loan from the corporation, according to
the Auditor-General.
"On
August 21, 2018, the Corporation approved and disbursed a loan of Sh20 million
to a company for the establishment of 380 acres of sugarcane, with a parcel of
land in Naivasha serving as security.
The
outstanding balance was Sh22.99 million as of June 30, 2020, and there were
Sh2,992,080 in total arrears, according to the Auditor-General.
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