Members of Saccos from across the nation are rallying together, clinging to hope that the funds embezzled from the Kenya Union of Savings and Credit Cooperatives Ltd (KUSCCO) would be recovered. In a shocking revelation, a forensic audit conducted by PricewaterhouseCoopers (PwC) uncovered extensive financial mismanagement within KUSCCO, resulting in losses amounting to a staggering Ksh 12.5 billion—money that belongs to hardworking members of about 247 Saccos who had collectively deposited Ksh 24.8 billion.
Following the revelation and presentation of the report to the National Police Service, several suspects were arrested as investigations ramped up. Many are waiting to see if the arrests will yield a formidable outcome where money is recovered.
The suspects, who are former KUSCCO officials, were charged with stealing Ksh 82.8 million. Twenty-three top managers have been identified as central figures in the union’s alarming scandal. Among them are eight executives whose actions have left many Saccos reeling from the financial fallout.
Inspector General of Police, Mr. Douglas Kanja, assured the public that the National Police Service is committed to thoroughly investigating this matter. He received the KUSCCO forensic report recently from Cabinet Secretary for Cooperatives and MSMEs Wycliffe Oparanya, emphasizing the urgency and seriousness of the situation. The Directorate of Criminal Investigations (DCI) is also actively probing this financial misappropriation scandal, which has not only caused immense pain to Sacco members but also threatened their profitability.
In a circular sent to Saccos, the Ministry directed Saccos to make impairment provisions for the funds they have invested in KUSCCO, mitigating the dire consequences these losses have on the annual earnings of members.
CS Oparanya has voiced grave concerns over the audit findings, which reveal a pattern of widespread mismanagement, illegal withdrawals, and outright misappropriation initiated by senior officials who were dismissed in May 2024. He promised that those responsible would face the full force of the law, especially now that KUSCCO has been left insolvent.
“This is a wake-up call,” Oparanya stated. “The lack of oversight within KUSCCO is a direct result of gaps in our regulations, which have allowed such misdeeds to occur unchecked.”
As the investigations unfold, Sacco members remain hopeful for justice and the potential recovery of their funds. This scandal serves as a reminder of the need for stringent oversight and accountability within financial institutions to protect the interests of ordinary citizens. The arrests offer a glimmer of hope that accountability will be restored and those responsible will be held accountable. The time for action is now. The voices of Sacco members deserve to be heard. They demand transparency and justice.
The mismanagement involved manipulating figures, including overstating income and understating expenditures, which were concealed in departmental advances. “We are currently investigating other Saccos and will soon forward their cases to the relevant authorities,” the CS added.
The forensic audit also revealed shocking details, including the fact that a deceased auditor signed KUSCCO’s financial statements. “We have already met with KUSCCO members and pointed out to them that they are unlikely to recover this money. Even if they do, the recovery process will take too long,” noted Oparanya.
The Ministry has moved to restrict KUSCCO from engaging in financial activities such as receiving deposits and issuing loans, allowing it to focus solely on advocacy and training. The CS explained that while it is not the government’s role to police unions, caution should have been exercised to avoid trouble. “It is not our role to police you. We come in for capacity-building, training, and technical aspects. We want a Sacco movement that is self-regulating,” Oparanya stated.
He said the Cooperative Bill before the Senate would establish clear structures for the management of unions and other service providers in the country.
Lady Justice Philomena Mwilu, who serves as the Sheria Sacco Board of Directors Chair, expressed regret, stating that it is unfair for KUSCCO to misappropriate the savings of hardworking Kenyans.
Some Saccos have lost hundreds of millions of shillings invested in the Union. Last year, a meeting convened by KUSCCO’s interim officials erupted into disorder as Sacco leaders demanded the prompt return of their members’ funds. The atmosphere was tense as furious Sacco leaders confronted union officials, accusing them of severe negligence that resulted in the significant loss of members’ savings. Many leaders directly held the previous KUSCCO management accountable, alleging their involvement in financial misconduct and complicity in the improper withdrawals.
Frustrated by what they termed a “stunt to save face,” Sacco leaders insisted on receiving clear answers from the Union and called for immediate action to hold those responsible accountable. They also requested complete transparency regarding the Union’s assets, particularly in light of reports indicating dwindling resources. The leaders further questioned KUSCCO’s revenue sources, accusing its staff of extravagant spending at Sacco members’ expense.
“KUSCCO is asking its members to accept the current situation while continuing to encourage them to save. What are we supposed to tell our members when they seek to withdraw their money? Even after organizing this meeting, the Union has failed to tackle the fundamental issue or reassure us that the funds will be returned,” said a concerned Sacco official.
“Cooperatives cannot be harmed by the actions of a few individuals. I call on all institutions to elect leaders who can be trusted, as leadership has a direct effect on the future of the cooperative and its members,” said Patrick Kilemi, Principal Secretary, the State Department for Cooperatives Development.
The Sacco Societies Regulatory Authority (SASRA) directed Savings and Credit Cooperative Organizations (SACCOs) to reflect any losses incurred in their financial statements. This guidance came in light of KUSCCO’s inability to meet its financial obligations.
Solomon Atsiaya, Kenya National Police DT SACCO CEO, characterized the current situation as a “bitter pill” for Saccos that have invested in the union. He emphasized that, despite the challenges, these organizations must make the necessary provisions to ensure their financial stability. However, he noted there is still an opportunity to save KUSCCO as it plays a crucial role in the sustainability of the Sacco industry.
Arnold Munene, the Acting Managing Director of KUSCCO, urged the government to intervene and address the ongoing issues affecting the union.
