HFC Limited was initially a building society formed in 1965 when FRANK IRERI WAS JUST 3 YEARS OLD. So innocent was he that no one ever imagined he was going to be the CORPORATE FRAUD CANCER that even the Regulator (CBK) cannot cure. Had we known he was going to be such a CORPORATE FRAUD CANCER that NO EXISTING LEGAL CHEMOTHERAPY can prosecute including the regulator, we would have handled the situation differently but most probably:
1.) We would have lobbied the colonial government to FAST-TRACK the invention and use of CONDOMS in the hope that Frank Ireri was not the MISCHIEVOUS TYPE OF SPERM to pass through a condom.
2.) We would have COMMANDED THE HEAVENS for an EARLY HIV EDITION with Frank Ireri as the primary BENEFICIARY of MOTHER-TO-CHILD-TRANSMISSION (MTCT).
HFC Limited was jointly owned between Commonwealth Development Corporation (at 60% equity) and the Government of Kenya (at 40%).
Those were the good old days before HFC Limited was taken over by the STUDENTS from the BRITAM SCHOOL OF THIEVES. Britam School of thieves is an UNREGISTERED AFFILIATE OF BRITAM Holdings Ltd (Formerly Britac) with their DEAN being the GODFATHER OF CORPORATE FRAUD, PETER MUNGA mwenyewe.
Some of the TOP STUDENTS of BRITAM SCHOOL OF THIEVES and the current EMBU MAFIAS are FRANK IRERI (MD – HF Group), BENSON WAIREGI (MD-Britam) & JAMES MWANGI (MD – Equity Bank).
I say EMBU MAFIAS because OUTSIDERS are not admitted to that school. In fact, when EDWIN DANDE allegedly spirited away with Billions from Britam Holding’s through an INVESTMENT-INSTRUMENTS-OVER-VALUATION-SCAM to form his Cytonn Investments, PETER MUNGA was very angry. Surprising, Peter Munga had no issue with the fraudulent act but with the person who did it. He could be heard lamenting in board meetings “HOW DID YOU ALLOW A NILOTE TO STEAL OUR BILLIONS? It would have been better if it was a person from EMBU”
The Dean of students, Peter Munga together with his students SHOT TO FAME in THE FRAUD INDUSTRY during MWAI KIBAKI’S PRESIDENCY. While Mwai Kibaki was never looting, he swindled taxpayers’ money through grand corruption. Mwai Kibaki and his friends (Peter Munga being among them) swindled money through their investment vehicle called TRANCENTURY and coincidentally Equity Bank & Britam Holdings became big companies.
Remember David Ndii differentiated between Looting and Grand Corruption and said: Grand Corruption is stealing 40% and putting 60% into good use while looting is stealing 90% and putting 10% to good use Uhuruto Style. As a result you have to borrow debt to pay debt.
In 2007 just before Mwai Kibaki was rigged back to power by the Mafias, The students from Britam School of Thieves took over HFC Limited’s majority shareholding, EFFECTIVELY INSTALLING FRANK IRERI as the MD. Equity Bank & Britam acquired a joint controlling interest of HFC Limited.
Frank Ireri started dishing out Fraudulent loans to Relatives, cronies and Questionable customers. Fast Forward, HFC Group accumulated uncollectable bad debts which were fraudulently issued and it was a SHOCKER that CBK ELEVATED THEM TO A COMMERCIAL BANKING STATUS despite knowing they had a stinking loan portfolio. The main reason CBK exists is to regulate toxic lending and when the same regulator elevates a bad loans institution to a bank then you start understanding WHY IT’S CALLED A ROGUE REGULATOR.
To test the claims by Cyprian Nyakundi (Corporate Fraud Scissor – ama ukipenda Wembe wa Ulaghai) that HF Group is in the business of cooking books of accounts with the intention of misleading the stakeholders, our BONOKO Accountant had to collapse HF Group’s books of accounts (as reported and available on their website) into a model. Coincidentally, the nearest model was the CAMELs model apparently used by Central Bank of Kenya (CBK) to determine the Financial soundness of the Deposit Taking financial institutions.
CAMELs: HF GROUP’S FEEL-GOOD FINANCIAL SOUNDNESS.
A look at the cooked financials presented on their website gives a fair picture aimed at hoodwinking HFG shareholders that the bank isn’t in so much of a bad shape.
However, on the same accounts as reported, we wish to pick a few points before RE-STATING the accounts and showing the Creativity employed by Housing Finance Group.
Going by the Financials in their website (HF Group Accounts), HFG’s average Amortization & Depreciation costs were KSH 10M & KSH 70M respectively before 2015. Suddenly, System amortization rose to an average of KSH 172 Million while Property Depreciation shot to an average of KSH 151 Million. Blogger CYPRIAN NYAKUNDI is on record blogging about theft on the system upgrade by non-other than FRANK IRERI in collusion with CAROLINE ARMSTRONG. Now we know why the Amortization had to be accelerated as a way of justifying LOOTING. Banks’ core banking systems are designed to last over 10 years with an average estimated cost of about KSH 400 Million.
KSH 400 million amortized for 10 years on straight line basis yields KSH 40 Million annually, NOT KSH 172 Million. Clearly, Frank Ireri is trying hard to justify the System Theft of about KSH 2 Billion (Nyakundi’s KSH 2 Billion HF System Scandal).
Secondly, HF Group has 2 strange items on their reported financials.
1.) According to the reported revenue numbers on the below image, Average rate of interest on loans has been below 14% for the 7 year period. Could it be that HF Group had anticipated the Interest Rate CAP and started implementing it in 2011?
Certainly not because a sample of customer facility letters (as revealed to us by our source) shows an average interest rate of 18%.
So where does the more than 4% go to as it is clear it’s not given to shareholders? Your guess is as good as mine, this is the place where the INTEREST-UNDERCHARGE-SCAM is housed (Interest Under-Charge Scam explained).
2.) There is no WRITE-OFF amount for all the years yet they have un-collectible fraudulent transactions. Even in the presence of collateral, Un-collectible debt is fully written down in 5 years. How come HF Group’s Fraudulent Loans are not written down?
3.) The Reported accounts have an entry of “OTHER INTEREST INCOME”. Revenues are generated from assets and so the Interest income is generated from Financial Instruments under the assets category. From the Assets, we attempt to eliminate the source of these revenues next:
a.) Due from Local Banks: Shareholders are likely to be misled into believing that HF Group earns revenues from overnight lending to Local Banking Institutions. If this happened, it would end up as the most open deception ever meted on banking industry shareholders. This is because we know HF Group has always been the borrower from other banks & not lender. If anything, they should be paying interest to other banks from the overnight borrowing.
b.) Cash Balances with CBK: Cash with CBK is mainly the Statutory Reserves normally proportional to the bank’s portfolio. As a result, this item is not meant to earn interest.
c.) Treasury Bills: This is the only remaining probable source of Interest income and certainly yes. If HF Group earned interest from these instruments, then the reported revenue numbers would have attractive yields as tabled down here.
FRANK IRERI, EDMUND MUCHEMI & CONSTANTINE BARAZA seems to have negotiated yields higher that 100% throughout the years and expects us to believe. For avoidance of doubt, you can go to CBK website and check the Treasury Bill yields over the last 10 years. Then we can rally Kenyans in a MILLION-MAN MATCH to HF Group headquarters and ask FRANK IRERI why he was the only one getting extremely preferential & non-existent T-Bill rates.
ADJUSTMENTS OVERLOOKED BY CBK’S PATRICK NJOROGE AFTER HEFTY BRIBES.
You will remember that in the year 2014, HF Group crafted a STRATEGIC GROWTH PLAN DUBBED “VISION 2020”. To Jump-start this journey, HF Group contracted MCKINSEY & COMPANY, an international management consulting firm to guide in its growth agenda.
For internal purposes and because HF Group was truly glued to the growth agenda, they had to TELL MCKINSEY THE TRUTH if a sound and reflective strategic paper was to be drawn. Secondly, there is no way they would lie to themselves especially if they were genuinely pursuing the growth agenda.
During the truth telling period, they disclosed to McKinsey there actual Non-Performing Loans (You can get them in KEVIN ISIKA’s Court papers). The Total NPL was KSH 16 Billion out of which KSH 9.3 Billion was completely UN-COLLECTIBLE. The Remaining KSH 6.7 Billion was equally un-collectible having been granted fraudulently but at least had the 5 year life granted by CBK before collateral is fully written down.
However, FRANK IRERI in cahoots with the board and its internal creative accountants decided to grossly UNDER-DECLARE the NPL position by KSH 5.3 Billion. Never mind Central Bank was aware about this particular financial crime but opted to advice HF Group how to go about the hiding, which was to amortize the provisions of the un-collectible loan portfolio for a period of 10 years. This is completely against their own CBK Guidelines which not only requires timely recognition of provisions for Grade 5 accounts, but also has a 5 year limit (20% annually) upon which collateral is required to be written down fully.
To ensure that CBK criminal activities were covered, CBK Governor (PATRICK NJOROGE) quickly RELEASED KENNEDY GACHOKI to HF Group as the HEAD OF COMPLIANCE just in time to ensure that his Criminal Advice was hidden from INCOMPETENT EXTERNAL AUDITORS (KPMG).
What our BONOKO ACCOUNTANT has done is to ADJUST the figures correctly. Remember CBK, KPMG and HF Group’s internal audit department CONSPIRED to mislead shareholders by hiding the true positions.
Adjusting the KSH 16 Billion correctly as reported by McKinsey, below numbers are generated.
After adjusting for additional provisions (which HF Group was expected to have done to the accounts of the period ending 31-Dec-2014), you will notice the SURGE IN ADDITIONAL PROVISIONS with the other KSH 6.7 Billion being written down annually at a rate of 20% as provided for by CBK guidelines.
CORRECT TREATMENT of the McKinsey NPL was definitely going to be a CATASTROPHIC ENTRY which HF Group was not going to entertain especially after a successful Rights Issue earlier in the year which yielded about KSH 3.5 Billion of new capital. Unfortunately, CBK took bribes to assist in “FALSE ACCOUNTING”. Never mind FALSE ACCOUNTING IS A CRIMINAL OFFENCE UNDER THE PENAL CODE.
Additional provisions means sustained low profits including losses which ends up sweeping the Retained Earnings and as a result Core capital.
A BRUISED CORE CAPITAL has DEVASTATING EFFECTS on the FINANCIAL SOUNDNESS of an institution and we demonstrate that next.
CAMELS: HOUSING FINANCE GROUP’S TRUE FINANCIAL SOUNDNESS.
With these Financial Indicators, if FITCH was to independently rate HF Group using the correct numbers, there conclusion would be “VERY WEAK FINANCIAL CONDITION AND ABILITY TO PAY IN A TIMELY MANNER IS EXTREMELY IN DOUBT” on a rating of “CC”.
Additional proof that HF Group is SURVIVING on FLUKE REPORTING AUTHORIZED BY CENTRAL BANK OF KENYA is found in their recent activities and supported by the suggested rating of “CC”. Just like the Kenyan Government, HF Group has been CONSTANTLY BORROWING TO PAY CORPORATE BONDS. The bonds are normally earmarked for financing there operations which is primarily lending. The question is, where did interest earned from the Operations go, to the extent that they always appear surprised with the MATURITY OF THE BONDS? You got it right, INTERNAL FRAUD BY FRANK IRERI mops up all profit to the extent of not being able to plan for the retirement of corporate bonds. Thus the Recommended Rating of “CC”.
In short, IF CENTRAL BANK WAS NOT A ROGUE REGULATOR, HF Group should have been PLACED UNDER RECEIVERSHIP IN 2014 followed by the JAILING OF FRANK IRERI, because the Adjusted Financial Soundness parameters are not anything to write home about. That begs the question, why are other banks being closed if they can bribe Patrick Njoroge? Are the owners from the regions classified as “Having no stake in the economy”?
Patrick Njoroge is a STRANGE CELIBACY SPECIALIST. We say so because one of the KNOWN CORPORATE CRIMINALS (HASSAN ZUBEIDI) who single-handedly defrauded Dubai Bank to its knees through loans with Fraudulent Collateral is his holiday pal. The minimal action expected of a criminal who brought down a whole bank is confiscation of travel passport. Surprisingly, he was once seen alongside Uhuru Kenyatta on an international assignment. Hii dunia iko na mambo.
In our future series, we will discuss about the corporate criminal’s (Frank Ireri) Insider Loans including Customer Names, so stay woke. As a sneak peek, you will notice that the first time Insider Loans by Directors were recorded was in 2014 yet FRANK IRERI took a lone through cronies to construct his SPRING VALLEY BUSINESS PARK much earlier.