Press Release: KIAMBU MICROFINANCE DEFRAUDS INVESTORS KES. 112 M
For Immediate Release 31 March 2015
KIAMBU MICROFINANCE KEEF DEFRAUDS INVESTORS KES.112 M
Nairobi, March 31, 2015: Today, MYC4 has announced the existence of fraud in one of its microfinance partners, Kenya Entrepreneurship Empowerment Foundation (KEEF). The Danish online lending platform, MYC4, claims that KEEF has defrauded Kes. 112 million in investor funds including accrued interest on the defaulted portfolio. A total of Kes. 245Million was mobilized for KEEF on the MYC4 platform by May 2014; and by August 2014, only Kes. 125Million had been received in repayments. “All engagements with KEEF have since failed and we are fearful that investments from citizens from 120 countries may have been embezzled by the Kiambu based microfinance institution,” says Mads Kjaer, CEO and Founder, MYC4.
MYC4 has claimed to have entered into a contractual agreement with KEEF in 2012 to fund small business in Kenya through the latter’s online lending platform. They further allege to have raised a red flag upon noticing an increase in defaulted amounts. In response to this, KEEF’s CEO, Daniel Kimani revealed that some of his staff members had been implicated in fraudulent matters and were under investigations by the police. Mr. Daniel assured MYC4 and its stakeholders that KEEF remained committed to the partnership.
“Rather than come clean with investors at MYC4, executives at KEEF falsely portrayed willingness to settle the balance,” said Mads Kjaer, CEO and Founder, MYC4. “The false portrayal has threatened the integrity of MYC4 as a credible lending platform, and even more worrying, the commitment of Kenya’s microfinance industry to access financial services for their informal businesses. Kes. 112 million is no mean
fete and we plan to purse it vigorously.” According to MYC4, KEEF’s conduct puts the MFI’s Board of Directors under uncertain light; its existence and functionality is questionable too.
According to MYC4, in addition to the Providers Loan Agreement, KEEF agreed to 100% guarantee borrowers by signing Guarantee and Indemnity Agreement that bound them to settle any defaulted loans. The Agreement stipulates that KEEF should remit the defaulted funds to MYC4 within 10 days after default. It is noted that when the loans first started to default in mid-2014 KEEF did not make any such settlement and since then the entire KEEF loan portfolio has defaulted.
Now MYC4 claims that they will halt activities in Kenya due to KEEF’s embezzlement. “Our experience with KEEF has revealed part of the nature of the microfinance industry in Kenya: there may be more individuals, masquerading as microfinance practitioners, but are using the profiles of unsuspecting entrepreneurs to source for funds to enrich themselves. Investors from more than 120 countries have lost Kes. 112 million in fraudulent dealings and many entrepreneurs in in Kenya’s informal sector will lack funds due to KEEF’s unprofessional conduct. In conclusion, MYC4 is warning potential and current entrepreneurs to be wary of such microfinance institutions.
MYC4 is an online lending platform founded in Denmark under the trade mark MYC4 A/S. The institution carries its operations through an online lending platform where investors from 120 countries across the world make bids to fund profiled entrepreneurs from Kenya. Entrepreneurs are profiled and uploaded by Microfinance Institutions in partnership with MYC4. These MFIs are referred to as providers. See the MYC4 lending process on www.myc4.comSource: blog.myc4.com
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