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

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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.

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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.

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“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.

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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

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Business

VIDEO: Inspiring Journey Taking Shape at Kiambu’s Top Gated Community

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Amani Ridge the Place of Peace was extremely busy today as the Engineers set their focus on achieving the very best in preparing the roads to murrum standard, ready for cabro when time comes.

The following activities will follow:

1. Storm water drainage

2. Piping water along the main lines (those building will only need to pay for water meter)

3. Underground power will follow

4. Installation of solar street lights will be the next step

5. After this, planting of 2, 000 trees will follow along all the roads in the estate

6. The sewerage systems will be replaced by Water recycling technology as initially promised

We are committed to #GoingGreen

Become part of the Amani Ridge family today

 

Call: 0790 300 300 | 0723 400 500
Website: www.optiven.co.ke

 

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Big Smiles on the way for Garden of Joy Owners

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A big announcement concerning the Garden of Joy gated community is set to be made this coming Friday, 23rd October 2020.

The planned announcement will be a cause of great joy for clients who have already made a decision to make the Garden of Joy their joyous home.

Those joining the success train later, will pay slightly higher for this property. We call it the ‘waiting-to-see-expense.’

If you are reading this message, go ahead and call your relationship advisor today to save the waiting cost and to become part of the joyous brigade.

Check us on FB Live on the 23rd October at 4PM as we unveil the greatest news at the Garden of Joy.

Secure your jewel today
Call us on: 0790300300 | 0723400500
Website: www.optiven.co.ke

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How Covid-19 will influence future innovation in home design

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The world is still smarting from the blows of the Covid-19 pandemic, a contagion whose disruptive thrust has been felt in practically every facet of our social and economic lives.

And as the shockwaves of the pandemic reverberate in the real estate industry, experts say that the sector must reinvent itself to align with the demands of the post- Covid-19 era. It’s time to revisit the way we build our homes and how we interact in the built environment and shed some practices that do not conform to, say, social distancing in the home. “As we approach a post Covid-19 era, a well-designed house will be critical all the while ensuring that the comfort at home is not compromised,” Architect Florence Nyole says.

She says a lot of the housing stock in Kenya lacks in basic design principles, such as admission of natural light and proper passive ventilation.

An architect with EcoSpace Architects and the chairperson of the Architects Chapter at the Architectural Association of Kenya, she asserts that our built environment currently suffers from the effects of intensive subdivision of land, which hinders proper design of homes.

“We have subdivided plots into too small parcels, such that proper design is a challenge. The Sick Building Syndrome (SBS), which is caused by poor ventilation, resulting in dusty, smoky or ‘ foggy rooms and continuous use of % artificial lighting is a major contributor to poor health and lack of wellness of the dwellers, especially in densely populated areas of our cities. This results the sprea if Covid-19, but also -7 airborne diseases,” she says. The World Health T Organisation (WH V \ tributes the sprea Covid-19 largely to the v movement of microdroplets, invisible to the naked eye, from infected persons. The droplets can linger in the air for up to 20 minutes, during which time they retain their potency to cause infection. Poorly ventilated spaces, therefore, serve as conducive environments for the spread of the disease.

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“A poorly ventilated mom will cause the microdroplets to be inhaled by other occupants or settle on surfaces causing further infection if not sanitised in good time”, Florence told Boma.

“Proper ventilation will be key in helping to alleviate the spread of the microdroplets. Building our’ homes with maximum aeration is critical in mitigating the spread of the virus within enclosed spaces,” she added.

This, she says, will involve installation of open-able windows within living spaces to allow for sufficient airflow. Further, in areas where wind speeds are low, aided air movement through the use of extracting fans will be required. She, however, cautions against the use of airconditioning, as the principle behind these systems is to cool and recycle air into the spaces. “If the air cycle is contaminated, these could be inhaled and cause infection to the occupants of the space”.

As the government implements the home-based care initiative for Covid-19 patients, we must rethink our interactions in the home of the future, seeing it not only as a conducive space for recuperation, but also a safe environment for caregivers and non-infected residents. As Florence puts it, moving forward, there’s need to look at our homes not only as spaces for living, but also as places of care for patients. “This brings the disease closer home and good design should offer as much isolation as possible if one of the occupants will require home-based care. This would entail designing homes with a self-contained section complete with areas for washing, cooking and resting that can accommodate at least two persons. Some form of visual

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continuity should be maintained to enhance human-to-human interaction and improve the chances of healing for the patient,” she points out.

Noting that the coronavirus also spreads due to contact with contaminated surfaces, Florence advises that there is need to not only sanitise potential contact surfaces in the home, but also minimise the number of surfaces that one comes into contact with. And this, she says, is a potential area crying out for innovations. “We should, therefore, expect an acceleration in the adoption of automated systems from door opening to light switching and even washroom flashing. The World Health Organisation has advised that surfaces should be disinfected as often as possible. If these commonly touched surfaces could be reduced as much as possible, adoption of automation to a greater extent than has been done in the past will be necessary,” she explains.

The world has adopted social distancing as a key mitigation against the spread of Covid-19. Under this new dynamic, the Chair of the Architects Chapter avers that we are likely to see a shift in the room sizes – especially living areas where guests are entertained – to observe this minimum distance.

Florence further says that some activities may be moved outdoors when the weather allows and there will be increased use of gardens and open spaces where there is fresh air.

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Sanitisation will also occur as one enters the home, and these sanitation facilities could be installed right at the entrance in comparison to the current status where hand washing occurs at the guest bathroom or at the handwasining basin within the dining area or the kitchen sink. A redesign of the entrance lobby to incorporate this may be considered.

“Proper natural ventilation and admission of daylight into the living spaces will become critical,” she offers, noting that whereas this may be easily achieved in standalone units such as single dwellings, the challenge is greater in areas where there is dense construction, such as tenements and highrise buildings adjacent to each other.

By PD.co.ke

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