In a startling revelation, Cooperatives Cabinet Secretary Wycliffe Oparanya has announced that the Kenya Union of Savings and Credit Co-operatives Union (KUSCCO) has incurred losses amounting to Sh12 billion due to severe mismanagement. This alarming conclusion arises from an initial review of KUSCCO’s financial records, conducted after former Cabinet Secretary Simon Chelugui dismissed the union’s board earlier this year due to poor oversight and resource management.
During a press briefing on Thursday, Oparanya shared insights from a forensic report prepared by Price Waterhouse Coopers (PwC), indicating that the union is currently insolvent with a deficit of Sh12 billion. The report highlighted considerable misallocation of resources, with funds being diverted to unauthorized areas owing to insufficient oversight mechanisms and inadequate legal frameworks governing KUSCCO’s operations.
“The findings of this report make it clear that KUSCCO’s financial mismanagement has reached an untenable level,” Oparanya stated. He assured that relevant stakeholders would take necessary action against the individuals responsible for these mismanagement issues once the comprehensive report was thoroughly reviewed.
The dismissal of KUSCCO’s board by Chelugui was a significant step taken on May 6, 2024, as he cited numerous deficiencies, including the board’s practice of declaring bonuses and paying dividends despite the union suffering considerable losses. Chelugui had noted that the board had continually mismanaged resources, maintaining dubious financial records that were manipulated.
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In an effort to restore trust and financial stability, the government has appointed an interim board of 15 members to oversee the rehabilitation efforts at KUSCCO. The newly designated board is tasked with addressing the issues raised in the audit and ensuring sound management practices are implemented moving forward.
Recently, KUSCCO, led by Chairman David Mategwa, submitted a detailed audit report to the Ministry of Cooperatives and MSMEs Development, revealing significant financial impropriety within the organization. The report asserts that KUSCCO’s liabilities exceed its assets, emphasizing the critical need for regulatory reform.
Minister Oparanya remarked on the absence of adequate oversight regulations, stating: “This situation underscores the essential need for robust legal frameworks to regulate such institutions effectively.” He also highlighted the risks associated with false financial reporting, including overstating income and understating expenses, which further exacerbated KUSCCO’s financial woes.
As the ministry assesses the findings of the audit, plans are underway to release a detailed press statement outlining the subsequent steps to rectify the issues at hand and prevent such occurrences in the future.
