Kenya Union of Savings and Credit Cooperative Society’s (Kuscco) has been declared insolvent as investigations reveal the institution has a deficit of Sh12.5 billion.
Yesterday, Kuscco’s interim board handed over a forensic report on the findings of the alleged mismanagement of funds at the institution after carrying out thorough investigations.
Co-operatives and Small and Medium Enterprises (SMEs) Development CS Wycliffe Oparanya, speaking at the handing over revealed that Kuscco is insolvent due to the investigations’ findings that the institution has a deficit of Sh12.5 billion.
Oparanya explained that due to the lack of oversight, there was a general mismanagement that allowed manipulators to see it as a state of income and understate expenditure, which was concealed through manipulation of books of accounts.
The forensic report comes after Sacco leaders confronted union officials demanding concrete answers and calling for action to hold the involved accountable following revelations from a Grant Thornton audit.
The audit had exposed that the union’s top officials had been siphoning Sh587 million annually between 2013 and 2024.
The officials’ alleged sins included transferring money to their own accounts, riding on a weak internal management structure to manipulate books of accounts and making transactions that cumulatively cost KUSSCO over Sh6.5 billion over the period covered by the forensic audit.
It was following the allegations that earlier this year, former Cooperatives CS Simon Chelgui sacked the entire board of Kuscco.
The Sacco leaders further accused the union of gross negligence that led to the massive depletion of members’ savings, many of them directly blamed Kuscco’s management, alleging their involvement in the financial irregularities and complicity in the illicit withdrawals.
Kuscco officials then had revealed to the leaders that they were working with agencies to investigate the loss but acknowledged that the union lacks the funds to compensate affected members.
They also blamed internal management failures for the irregularities. “Kuscco is asking members to accept the situation as it is while also urging them to continue saving. What are we supposed to tell our members when they start demanding their money back? The union has failed to address the core issue or provide any assurance that the money will be refunded,” said Christopher Wainaina, chair of PCEA Ruiru Sacco.
Oparanya promised to send the forensic report to relevant government agencies including the EACC, the Directorate of Criminal Investigations (DCI) and the police so that those involved could face action.
“This is a serious issue, some of these issues are the ones which have brought us down in this country, where individuals or individuals conspire to bring down institutions like Kuscco, an institution that is meant to take care of other Saccos and extract money to use the money as personal property, which is not acceptable,” Oparanya said.
He added that the cooperative movement has been crying over mismanagement for so long, adding that he was happy the Cooperatives Bill, 2024, was moving very well at the National Assembly and hopefully could move to the Senate. “If it goes through, it will be able to cure some of the issues that arose at Kuscco,” he stated.
