During routine partner monitoring at our Field Partner, Admic, Kiva became aware of difficulties Admic is having, mostly as a result of the current economic downturn. Admic is suffering from this recession due to higher client delinquencies, a strong devaluation of the Mexican peso, among other factors.
In late 2008, Admic's board uncovered an operational fraud at the management level that had detrimental effects on Admic’s portfolio quality. The management was removed from the organization and a new management has now taken over and improved the flawed internal controls that existed earlier.
See any resemblance to MIFEX here? Late pays are attributed to things beyond the lenders' and MFI's control (MIFEX = too much rain) and later we're told there was fraud.
Also, I wonder why Kiva told us these reasons in June then a month later tells us that Admic's board uncovered fraud last December. Why didn't Kiva know about the fraud last December? Or was the June 5 quote from a much earlier Kiva message?
I made a loan through Admic in March 2009, months after Admic discovered the problem. And months after Kiva could have known there was a problem.
This is the third MFI I've experienced fraud with (MIFEX and FSMA being the other two). There has been so much discussion and apprehension over the possible demise of Kiva over USA loans and currrency risk, but it seems to me that the MFIs are the real area of concern, and the apparent inability of Kiva to monitor closely enough. How can a lender have confidence in Kiva's star system?
John
