The Kenya Union of Savings and Credit Co-operatives Ltd (KUSCCO) has been the pride of the cooperative movement for years and is considered a fortress of trust and financial security, making it a key pillar for the movement.

But today, KUSCCO is becoming another poster child of corporate greed and fraudulent brilliance. You have to admire the sheer audacity: an institution meant to safeguard people’s hard-earned savings brought down by the very leaders entrusted with its protection?

With the arrest of chairman George Magutu Mwangi and his alleged cronies, we’re left asking ourselves, “how did we get here?” and more importantly, “how do we claw our way out of this quagmire?”

Lets face it, the PwC forensic audit is a masterclass in scandal, reading like a heist movie script. We’re talking about forged signatures from beyond the grave – yes, a dead auditor allegedly signed off on cooked accounts.

There were phantom profits, shady contracts handed to firms owned by those at the top, and withdrawals so dodgy even magicians would be impressed. The sheer creativity involved is both appalling and, dare I say, almost admirable.

These masterminds built an empire of lies, syphoning off billions while laughing all the way to the bank — most likely to several banks, just to cover their tracks.

Much as this looks like a KUSCCO affair, truth is that this scandal strikes at the core of Kenya’s cooperative movement, which is a vital pillar of the economy. Cooperatives in Kenya are about community empowerment, wealth creation, and social equity. They provide affordable credit to millions, particularly in rural areas where conventional banks rarely venture. They support small-scale entrepreneurs, boost local economies, and promote equitable wealth distribution. In short, cooperatives are the financial lifeblood of this nation.

According to a PwC audit, KUSCCO was knee-deep in corruption from 2018 to 2023. Sh206 million vanished into thin air, phantom commissions were paid out, and Sh107.3 million was handed out as “advance payments” in the shadiest deals imaginable.

The trio of former MD George Ototo, Owino, and Magutu didn’t just mismanage funds—they orchestrated a masterclass in fraud. Yet they didn’t act alone. The rot is deep, and every accomplice involved must be identified and punished accordingly.

This is where the Assets Recovery Agency comes in. They need to go all out—trace the money, freeze bank accounts, seize properties, and auction every ill-acquired asset to recover as much as possible. Even if we can only reclaim a fraction of the Sh13.3 billion lost, it’s better than letting them keep it.

Yet, here we are, watching the rot unfold, thanks to a few greedy individuals who figured out how to play the system. The impact is devastating — not just financially but also psychologically. This scandal shakes the very foundation of trust on which cooperatives are built. It’s like finding out your trusted family doctor moonlights as a con artist. How do you ever feel safe again?

We need to see swift prosecution, and not just the usual song and dance we’ve become accustomed to in Kenya. That no stone will be left unturned. If found guilty, Magutu and his cohorts must face the full wrath of the law. Lets see prison time, asset seizures, and permanent bans from holding any public or corporate office. Anything less would be an insult to the members whose savings were looted.

However, punishment alone won’t cut it. We need to fix the system. Narrowing KUSCCO’s role to advocacy and capacity building is a good start, but it’s not enough. The entire governance structure needs an overhaul. We need watertight checks and balances, transparent financial reporting, and mandatory independent audits. The fact that previous audits were signed off by a dead man is proof enough that the current systems are a bad joke.

And let’s not forget about the legal framework governing SACCOs and cooperatives. We need stricter penalties for fraud, clearer rules on conflict of interest, and enhanced powers for regulatory bodies like the Sacco Societies Regulatory Authority (SASRA). But regulations are only as good as the people enforcing them. If the watchdog agencies are underfunded or compromised, we’re just rearranging deck chairs on the Titanic. SASRA and other regulatory bodies must be empowered, independent, and ruthless in their pursuit of justice.

Finally, public education is key. Because cooperatives are built on trust and participation, members need to be more vigilant and informed. But they need to know their rights, so that they can demand for transparency, and hold leaders accountable.

The cooperative movement is too important to let greed and corruption destroy it. If we don’t fight for its integrity, we’ll lose more than just billions — we’ll lose trust, hope, and the promise of shared prosperity that cooperatives have always stood for.

— The writer is People Daily’s Business Editor