Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Cabinet Secretary Wycliffe Oparanya has directed for immediate dismissal of former Kenya Union of Savings and Credit Cooperatives (KUSCCO) still holding positions in their primary Saccos with immediate effect.
This follows a forensic audit report by PWC Kenya which reveals how former KUSCCO officials participated in an intricate web of corruption and mismanagement of funds to the tune of Ksh 12.1 billion.
“I also want to direct the commissioner here, because those people were members of KUSCCO board are member of a primary saccos went back and they are there. I want them dismissed immediately. If they want to go to court they should go and if they are not carefully we shall name them,” warned Oparanya.
According to the forensic audit report, KUSCCO former directors who were dismissed in May this year had been engaging in misappropriation of assets and corruption relating to inflation of commissions.
The audit reveals that as at the end of 2023, KUSCCO officials inflated the union’s assets by a whooping Ksh 10.1 billion which do not exist out of the Ksh 22.6 billion stated as total assets.
On the other hand, KUSCCO also overstated its liabilities by Ksh 1.8 billion putting its asset base at Ksh 18.6 billion instead of an estimated Ksh 20.4 billion.
From the report, the officials orchestrated purchased a non-existent parcel of land at a cost of Ksh 45 million which auditors could not locate. The officials also spent another Ksh 17 million for the purchase of a frequency for a radio station it was supposed to establish. This too cannot be located.
The former director are also accused of carrying out unauthorized transactions, inflating commission from a rate of 1pc to 3.3pc while some agencies contracted to carry out various businesses with union had conflict of interest.
“For loans that are being issued to sacco members, we found out that there was lack of due diligence because some of those loans were given to institutions who would not pay and of course they had non-performing loans,” said Martin Kimathi, Partners at PWC Kenya.
The audit report is now recommending that the union undergo a restructuring including the subsidiaries in order to keep it running and manage operational expenses, suspend interest on loans to avert further increase in non-performing loans
Members further want the government to commence asset recovery from former directors who are accused of running down the union.
“We have shared the findings of the report with relevant authorities to carry out investigations and all those found culpable will be held accountable through appropriate legal and administrative channels,” said David Mategwa, KUSCCO Chairman.
Additionally, the report recommends for recapitalization of the union through fresh capital and conversion of current debt to equity.
