The Ministry of Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Development has ousted the Kenya Union of Savings and Credit Union (KUSCCO) board of directors following damning revelations of financial mismanagement and irregularities.
In a press statement released on Monday, May 6, 2024, the Ministry reiterated its commitment to upholding corporate governance standards within the cooperative sector, emphasizing the need for transparent management of cooperative resources.
Acknowledging the findings of an inspection conducted by the Commissioner for Cooperative Development in October 2023, the Ministry disclosed egregious discrepancies unearthed in KUSCCO’s operations, prompting immediate administrative actions to address the situation.
“Preliminary findings indicate systemic deficiencies in the management of resources, including creative and unreliable financial records,” the statement read.
The investigation unveiled a series of alarming irregularities, including high cash withdrawals totaling KES 5,466,016,687 between February 2013 and April 2024, and suspicious cash transfers amounting to KES 318,160,172 to the Company Secretary of KUSCCO Housing Society.
Furthermore, loans were extended to senior KUSCCO staff and directors, with KES 50 million allocated to the Group Managing Director, KES 4.5 million to the Company Secretary of KUSCCO Housing Society, and KES 7 million to the Head of KUSCCO Housing Co-operative, according to the press statement.
The investigation also uncovered a double purchase of the same land valued at KES 80,546,000, suspicious cash transfers to insurance agencies amounting to KES 434,160,379, and irregular cash transfers from KUSCCO accounts to staff accounts, including KES 67,035,752.35 to the Group Managing Director and substantial sums to other staff members.
“Despite incurring losses, the union proceeded to declare bonuses, dividends, and interest, a practice that cannot be condoned,” the Ministry’s statement emphasized.
In response to these revelations, a consultative meeting was held on April 25, 2024, involving representatives from depositors, who unanimously agreed on the need for decisive action to hold the board of directors accountable and restore confidence in the union.
“We remain steadfast in our duty to ensure responsible and transparent management for the benefit of all stakeholders,” the Ministry reiterated in its press statement.
