Connect with us

Business

FEP: FBI now invited to probe Firm that “used the Bible to promised investors the moon but delivered false hope”

Published

on

He came armed with a Bible, silver tongue and hope. But a decade and about Sh6 billion worth of investments later, the bounty dividends that architect John Kithaka promised have not been delivered, The Sunday Nation is reporting.

According to a story appearing in Today’s edition, thousands of Kenyans both at home and abroad put their savings in Fountain Enterprises Programme (FEP) and, 12 years later, they are yet to receive their dividends.

COLLAPSED

“In 2012, investors were promised that dividends would start being paid in 2015, then in 2018 and then this year, 2021 was announced as the new magical date,” writes the paper.

Tired of the tall tales, some investors have invited the Directorate of Criminal Investigations (DCI) to investigate the firm and those in the United States are calling on the Federal Bureau of Investigations (FBI) to intervene. Last year, the company estimated to be worth Sh4 billion made a loss of Sh650 million. So, what went wrong?

An interview with former managers show wrong investments, an overbearing founder, fraud by managers and lack of systems punctured the momentum of what was once a promising company.

“As of May 2011, members were able to sign up on the Sh399,381 per share offer. Original founder members bought tier two founder shares at Sh760,000. By close of share selling in August 15, 2012 a share was going for 465,000,” said an investor who was heavily involved in mobilising Kenyans in United States.

The money was to be invested in hotels, tours and travels, schools, real estate and banking.

To realise this, several companies were established including MobiKash, Fountain Media, Fountain Group of Schools, Fountain Sacco, Nobel Insurance Agency, Suntec Supermarket, Fountain Credit Services, Fountain Technologies, Fountain Safaris, Kisima Real Estate, Nobel Insurance Agency, and Citadelle Security. Several have since collapsed.

According to interviews with some board members, that was the company’s first mistake. It spread itself too thin and was unable capitalise on all the businesses it ran.

READ ALSO:   COMMUNITY APPEAL: Jeremy Kuria's Family to hold fundraiser in Atlanta this weekend

Current FEP Holdings chairman James Kaguchia admitted to the Sunday Nation that the slow progress of projects was due to undercapitalisation triggered by a failed private placement in 2014 but the company is still on course. Fountain radio and TV, for instance, were understaffed and had little cash for operations and thus collapsed.

OVERBEARING

MobiKash, a money transfer service, was one of the earliest investments but it was closed under unclear circumstances down without benefiting investors.

“Although FEP had initially partnered with MobiKash, the deal was later deemed as not viable. FEP therefore exited the partnership with CBK’s approval,” Mr Kaguchia said.

But, perhaps, one of the most iconic investments was Suntec Hotels in Sagana, Kirinyaga County, which has stalled.

“An estimated Sh800 million of investors’ cash has been used to put up the four-star Suntec Hotel in Sagana which is 70 per cent done with a current valuation of Sh1.2 billion. The hotel is due for launch later this year in partnership with a Swiss hotel operator,” said Mr Kaguchia.

Mr Kaguchia said FEP Group comprises three arms, namely, FEP Holdings (the holding company) with 74,000 shareholders; FEP Society (the network) with over 200,000 members; and FEP Sacco (savings and credit), with over 15,000 members.

The firm’s CEO has been accused of being overbearing, accusations he has denied in previous AGMs arguing that as the dream carrier, he needed to be firm.

With a new corporate structure courtesy of the FEP Society Strategy 2019-2021, Dr Kithaka’s designation is no longer President but Patron of FEP Society. He remains the holding company’s CEO but is not directly involved in running the subsidiaries as was the case in the past.  Mr Kaguchia said he is aware of the anxiety among members but adds that all is not lost.

READ ALSO:   VIDEO: Meet 'Mahiga Homes' Team at KWITU Reunion event in Los Angeles this weekend

“In 2017, FEP made a loss of Sh650 million. FEP value currently stands at Sh4.15 billion,” he said.

In 2012, Mr Charles Kabaiku, who was tapped from the United States to help manage the company, left within months after his advice on the need to have systems put in place was disregarded.

“When I came in as the Group Operations Manager, we declared a positive profit on our annual reports at the AGM of about Sh58 million for the year ending 2012. I tried to centralise the financial management system but the move was resisted,” said Mr Kabaiku.

Mr Charles Kabaiku, an investor and former Group Operations Manager at Fountain Enterprises Programme (FEP), speaks during an interview at Nation Centre in Nairobi on June 5, 2019. He said his efforts to streamline financial systems at the company were strongly resisted. PHOTO | EVANS HABIL | NATION MEDIA GROUP

An audit by KPMG revealed that some managers were pilfering the firm. The company did not disclose the nature of theft.  Fearing that they may lose their investment, Kenyans in the US complained to the embassy in Washington.

The then Kenyan ambassador to US Robinson Githae forwarded the complaint to the Directorate of Criminal investigations but little was done.

Now, fearing that their investigations on the operations of FEP may not be conclusive, Kenyans who also hold US citizenships are mulling forwarding the issue to the United States federal government authorities.

“The Kenya Embassy in Washington DC actually contacted FEP and proposed that CID intervenes regarding alleged misappropriation of investors’ money. However, upon review of the case, the CID did not find a basis to investigate FEP,” said Mr Kaguchia.

Some of the cases the diaspora cites are an investment in Mombasa. Diaspora investors were told to purchase beach plots in Mombasa with fliers showing plots numbers and a hotel to be built, but little progress has been made.

READ ALSO:   Kenyan man gets life sentence for raping elderly US patient

In 2016, Mr Kithaka went around selling shares of a Tier three bank. The issue has not been heard of since despite shareholders having been promised a stake in the bank.

“FEP Holdings had intended to acquire a stake in the said Bank. However, following further internal deliberations and consultations with the Central Bank of Kenya, FEP decided to pull out of the deal. However, some individual FEP shareholders have invested in the bank in their personal capacities,” said Mr Kaguchia.

Mr Kaguchia said FEP Group currently owns an estimated 6,000 acres of land valued at over of Sh2 billion. The land is earmarked for housing projects and hotels.

CONSULTATION

“We are also exploring agribusiness and any other viable ventures. The new board is currently reviewing and re-aligning the Real Estate strategy to guide the group’s investment through the three-year ‘FEP Mpya’ turnaround journey,” he said.

But the most baffling issue was the sudden creation of a new company, Tai Eagles and Tai Housing, which was done with minimal consultation with investors.

“Tai Ltd is an associate company of FEP Holdings. There exists no financial or governance relationship between TAI and FEP. Tai Eagles deals with healthcare and housing. Tai runs two health facilities, Tai Eagles Hospital in Thika Town and Nairobi CBD. Tai is currently in discussions with KRA regarding certain aspects of compliance. During the 2014  AGM, members passed a resolution to close all FEP offices as a cost-cutting measure. Tai Ltd, an associate company to FEP Holdings, was co-sharing the physical space with FEP,” said Mr Kaguchia.

The chairman calls for patience.

“The best laid plans do not always yield the intended results,” Mr Kaguchia said.

SOURCE: nation.co.ke

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

SPONSORED: Luxurious Thika Superhighway Properties

Published

on

Optiven Real Estate in partnership with Equity Investment Co-operative Society Limited is enabling Kenyans to own very prime properties in this leafy suburb at Thika Greens. This jewel property is located in a serene environment along Thika Super Highway, and with up to 90% financing from Equity bank.

Available amenities include:

  • 18 Hole par 72 Championship Golf Course
  • Tarmacked & Well maintained roads
  • Water and electricity on site
  • 24/7 top security
  • Magnificent Operating Club House
  • Golf Villas that offer World class accommodation services
  • A state-of-the-art entry gate
  • Stone perimeter wall
  • Controlled development with a variety of residential house plans to choose from
  • What’s more, the project has Water, Electricity, Common areas, House designs and Ready Title Deeds.
  • The project landscaping is only comparable to none. This is where every human desires to live and enjoy life

 


Investment Offer

  • Cash price: From Ksh. 3.28M depending on the size and location – We have 1/8th, 1/4, 1/2, 1 acre and  2 to 3 acres
  • Installments: Deposit 10% and get 90% financing for 10 years.

Ease of Acquisition

  • The bank has a dedicated personal to help you process the loan. You only require to pay 10%, with 90% financing done by Equity Bank.
  • You can easily buy a property in this amazing project through the following ways:
  • The customer is only required to raise 10% of purchase price and 90% will be funded by Equity bank.
  • The customer will be required to pick their property of choice; then undergo an appraisal by the bank.
  • Cash buyers are welcomed as well.
  • Installment option of up to 12 months is available for those who opt not to go the loan way.
  • We have very few plots available depending on the size and location
  • Make a good Choice Today and be part of this success story that is in the making

READ ALSO:   SAD: Kenyan woman passes away in Atlanta, GA
Continue Reading

Business

Kenyan Who Quit Aviation for Mortuary Business Now Minting Money in US

Published

on

Featuring on Saturday, December 7 in an episode of The Chamwada Report, Ng’ang’a revealed that he first studied aviation before losing interest in flying.

“I actually came to do flying, I didn’t follow it up. It wasn’t my passion,” Ng’ang’a an intimated.

“I ended up going to school, took some medical classes. Someone came to school on a career day talk to us about various career lines, he talked about forensic science and I ended up venturing into mortuary sciences. That’s how I ended up in the funeral business,” he revealed.

John Richard Ng’ang’a walks Alex Chamwada and crew through the operations of Bedford Memorial Funeral Home. Photo: Alex Chamwada

Ng’ang’a served in the corporate world for 19 years before he branched out to establish his own funeral home in December 2015, as indicated in company website www.bedfordmemorialfuneralhome.com

He has been in the industry for five years and handles about 300 cases annually.

While engaging Chamwada on how he started his business, the entrepreneur revealed that he did it solely using his savings and based his motivation on a quote by American billionaire Mark Cuban.

“Like Mark Cuban says, its only a moron that starts a business with a loan, if it doesn’t work you still have to pay the loan. So I opened my business without a loan, but with only the money I had saved,” Ng’ang’a stated.

READ ALSO:   SAD: Kenyan woman passes away in Atlanta, GA

Despite the success of his business, Ng’ang’a maintains a relationship with Kenya, intimating to Chamwada that he has even started an enterprise in Kenya despite the challenges facing startups in the country.

“I have different projects at home that I’m involved in. I just started a magazine in Kenya that is going to explore different areas and kinds of tourism and we are getting in touch with counties to support us, even if Kenya is hard to penetrate,” Ng’ang’a stated.

“Living in the US, you will understand. You can walk in and have services handled in 10 minutes and walk away, in Kenya, you can chase somebody for days. It becomes discouraging,” he added.

A Bedford Memorial Funeral Home hearse. Photo: Alex Chamwada

When quizzed on how he has managed to stay successful, Ng’ang’a explained that one had to have compassion and a good understanding of people.

“I’ve had people come here and start going off on me. It is an inborn thing. You have to be compassionate even to deal with people and you have to understand that. Otherwise, you will be upset every day,” Ng’ang’a stated.

According to the company website, Ng’ang’a founded the funeral home in order to facilitate the needs of the middle class, single families, low income and senior citizens on a budget.

READ ALSO:   Kenyan man found guilty of raping a Kenyan woman in India, to serve life jail term

By providing flexibility, discount prices and providing unique customised services, Ng’ang’a has found success in the business.

Adding to the many services offered, the funeral home has an inbuilt chapel with a capacity of up to 70 people for bereaved families to conduct services and prayer.

“We have a chapel if the bereaved families don’t have a church they can do their services here. If they have a church we’ll head to the church and they can have their service there,” Ng’ang’a shared.

A casket prepared for transportation to Kakamega by Bedford Memorial Funeral Home. Photo: Alex Chamwada

“I want to tell Kenyans who are getting green-cards not to sell everything back home. Green cards don’t give you the right to move away from home,” Ng’ang’a advised.

“You can have a green card, come work for six months, go home for six months. You can live in both worlds and you will be a happy person. But you have to be reliable, dedicated, committed,” he concluded.

by `Kenyans.co.ke

Continue Reading

Business

Kenya Railways adds more SGR train coaches to meet high demand

Published

on

Kenya Railways has announced that it will add five more coaches to the Standard Gauge Railway (SGR) passenger train that shuttles between Nairobi and Mombasa to cater for the rise in passenger numbers in the festive season.

The extra coaches that will cater to both economy and first-class passengers will be added starting December 22, 2019 to January 3, 2020.

The train service, dubbed Madaraka Express, is currently fully booked for the Christmas season as Kenyans seek convenience, fast and affordable travel.

“With the exception of Dec. 28, the morning train from Mombasa and the afternoon train from Nairobi will feature an additional first-class and four economy class coaches from Dec. 22, to Jan. 3, 2020,” said Kenya Railways in a notice.

Kenya Railways@KenyaRailways_

Public notice:

With the exception of Dec. 28, 2019, the morning train from MSA & the afternoon train from NRB will feature an additional first class & 4 economy class coaches from Dec. 22, 2019 to Jan. 3, 2020. We appreciate your continued support.

See Kenya Railways’s other Tweets

Kenya Railways has normally increased the train coaches during the holiday season as demand surges and has steadily increased coaches on the Nairobi-Mombasa route since the SGR passenger train was launched in June 2017.

The rising demand for the SGR passenger train service has however dealt a huge blow to commuter bus operators.

By NN

READ ALSO:   VIDEO: Meet 'Mahiga Homes' Team at KWITU Reunion event in Los Angeles this weekend
Continue Reading


Are you looking for a Church to fellowship in Atlanta Metro Area?

poapay3

Like us on Facebook, stay informed

NEWS TRENDING RIGHT NOW

2019 Calendar

satellite-communication1.jpg

Trending

error: Content is protected !!