According to a report by the Auditor General, Post Bank is in a deep financial mess. The report reveals that the management misused investors’ money to the tune of Ksh.10 billion. Shockingly, the report also reveals that the bank cannot account for Ksh.1.7 billion in customers’ savings and deposits
Fresh details have emerged revealing how mismanagement at the once famous Kenya Post Office Savings Bank, popularly known as Postbank could lead to its collapse. Pressure is now mounting on the Managing Director Raphael Lekolol to resign and pave the way for a more competent administrator to salvage the state corporation from total collapse. Mr Lekolol was appointed by the board in June 2020.
Also under pressure is the board chairman Ntoros Baari ole Senteu who was appointed by then Cabinet Secretary for finance Ukur Yatani. The appointment was first mentioned in the Kenya gazette notice number 5854, dated October 16 2019.
He was appointed with effect from 16th October, 2019 for a period of three (3) years, technically, his contract expired in October 2022. As to whether his contract will be renewed or not depends on President William Ruto. According to a report by the Auditor General, Post Bank is in a deep financial mess. The report reveals that the management used investors’ money to the tune of more than Ksh.10 billion. Shockingly, the report reveals that the bank cannot account for Ksh.1.7 billion in customers’ savings and deposits. The audit further revealed the bank made a loss of Ksh. 1.4 billion in the year ending December 2019, pushing its revenue reserves downwards to negative Ksh.14 billion.
According to the report, customer savings and deposits have exceeded the bank’s assets by Ksh. 7.3 billion. This means that the bank has a cash flow crisis, hence technically insolvent. It has also been discovered that the management failed to explain a variance of Ksh.1.7 billion in customer savings and deposits.
On the lost Ksh.35.2 million customers’ savings, the Auditor General said the bank should have recovered the cash shortages in 48 hours as spelt in its human resource policy. Under the circumstances, the board and management have not implemented the policy to safeguard customer’s savings and deposits. Further, the report reveals that Postbank was defrauded of Ksh.81 million during the year under review.
Despite making losses and facing serious mismanagement issues, the report reveals that the bank was overstaffed by at least 64 employees. As of the time of the audit, there were 674 employees, exceeding the staff establishment of 610. Postbank has also been flagged for failing to collect some Sh47 million that it is owed by tenants, who have since vacated the bank’s premises.
