Government orders forensic audit of Saccos after Kuscco Sh13.3 billion fraud
Oparanya said the audit also seeks to bring corrupt officials to justice, noting that several Saccos across the country were in financial distress, a situation that prompted the government’s decision to take action.
The government has ordered a forensic audit of all Saccos to safeguard members’ savings from financial mismanagement.
Co-operatives and MSMEs Cabinet Secretary Wycliffe Oparanya issued the directive after a Sh13.3 billion scandal at Kenya Union of Savings & Credit Cooperatives (KUSCCO) exposed weaknesses in the sector’s financial oversight.
More To Read
He said the audit also seeks to bring corrupt officials to justice, noting that several Saccos across the country were in financial distress, a situation that prompted the government’s decision to take action.
“The government is implementing decisive measures to address financial mismanagement. Individuals found culpable will be held accountable through the available legal and administrative framework,” Oparanya said.
“Similar measures will be taken against any cooperative leader who misappropriates or mismanages members’ funds. This will no longer be tolerated,” he added.
Oparanya further disclosed that new regulations were being formulated to guide the operations of cooperative societies and that Sacco officials would undergo training to ensure better governance. He said the government was tightening oversight to seal loopholes that fraudulent officials have exploited to steal members’ funds.
The CS also urged cooperative societies to strengthen their internal systems to minimise cases of fraud and financial mismanagement by senior officials.
He also announced plans to enhance the powers of the Sacco Societies Regulatory Authority (Sasra) to strengthen supervision and accountability in the cooperative sector.
“We intend to give Sasra more powers to carry out supervisory duties to ensure the cooperative movement is strengthened,” Oparanya said.
Oparanya called for an immediate restructuring of Kuscco’s management, warning that all individuals implicated in the misappropriation of funds would be held accountable.
“All individuals involved in the Sh13.3 billion embezzlement of members’ deposits will be prosecuted,” he said.
The scandal has left Kuscco facing insolvency, with a Sh12.5 billion deficit, putting Sh24.8 billion in Sacco savings at risk. Some senior officials have already been taken to court over their alleged involvement.
Oparanya revealed that he had handed over a forensic audit by PricewaterhouseCoopers (PwC) to Inspector-General of Police Douglas Kanja for further investigations and prosecutions. The PwC report detailed large-scale financial irregularities at Kuscco, including bribery, unexplained bank withdrawals, and conflicts of interest in contract allocations.
The audit also found that Kuscco’s financial statements had been manipulated to conceal losses, with falsified accounts signed by the late Alfred Basweti of Omenye and Associates. Executives allegedly engaged in fraudulent activities while misrepresenting the institution’s financial health.
Four former Kuscco officials were on Tuesday charged with stealing Sh82.8 million from the umbrella body between October 2022 and April 2023.
Top Stories Today
