AFC in trouble for lending on ‘fake’ deeds

The Agricultural  Finance Corporation (AFC) is on the spot for advancing loans to farmers against collateral suspected to be fraudulent.

Auditor-General Edward Ouko said the farmers’ lender advanced Sh22.7 million to 13 farmers in Kapsabet, Nandi County.

“Information available indicates that the corporation advanced the amount against various collaterals in the form of title deeds which appeared fraudulent.

In the circumstances, the recoverability of the amount (Sh22,661,100) is doubtful,” Mr Ouko says in a disclaimer opinion of AFC’s audited books of accounts for the year to June 2016.

A disclaimer audit opinion means that the auditor was unable to obtain sufficient, appropriate audit evidence to form an opinion on the accuracy of the financial statements.

AFC, Mr Ouko said, issued loans to customers amounting to Sh4.3 billion in the year under review.

He said the AFC did not reveal the actual classification of loans under the financial statements on provision for doubtful debts.

He also questioned AFC”s failure to make provisions for non-performing loans advanced to staff amounting to Sh286.5 million relating to personal advances, house and car loans.

The corporation only made a provision for Sh20.4 million similar to 2014/15 financial year, which Mr Ouko says is inadequate as available information reflects non-performing accounts that have not been provided for.