The Kenyan government is investigating KUSSCO after a forensic audit revealed significant financial mismanagement and irregularities. The audit indicted Sh3.7 billion in non-performing loans and Sh798 million in overstated profits. The Ministry of MSMEs has moved to restructure KUSSCO, suspending its financial activities until public trust is restored, while a new Cooperative Bill aims to tighten regulations in the sector.
The Kenyan Ministry of Cooperatives and Micro, Small, and Medium Enterprises (MSMEs) has initiated a major investigation into the Kenya Union of Savings and Credit Co-operatives (KUSSCO) following a comprehensive forensic audit by PricewaterhouseCoopers. The report revealed substantial financial mismanagement, alleged criminal activities, and irregularities within the organization. The findings led to the involvement of national security agencies to promptly address the issues.
At a press conference, CS Dr. Wycliffe Oparanya detailed critical findings from the audit, which uncovered Sh3.7 billion in non-performing loans, inflated profits of nearly Sh798 million over six years, and Sh2.7 billion in irregular commissions. Additionally, it reported mismanagement associated with the central finance fund amounting to Sh1.3 billion. These alarming figures prompted urgent government intervention and oversight.
Dr. Oparanya highlighted that KUSCCO’s management had strayed from its foundational mission since its establishment in 1973, engaging in unauthorized financial dealings without regulatory compliance. As a result, operational inefficiencies and significant financial losses occurred, which necessitated the government’s decisive action. The CS called for thorough legal measures, emphasizing that investigations would lead to accountability to deter similar actions in other organizations.
Despite the troubling revelations, KUSSCO will continue its operations but undergo significant restructuring. The Ministry will limit KUSSCO’s scope to advocacy and capacity-building initiatives, suspending all financial operations to restore public confidence. Dr. Oparanya advised SACCO members to anticipate limited recovery of their funds and adjust their financial records accordingly to manage losses effectively.
In conjunction with the investigation, the National Assembly has passed the Cooperative Bill 2024, which seeks to enhance regulatory frameworks and governance within the cooperative sector. Dr. Oparanya underscored the importance of this legislation in preventing future misconduct in apex institutions, including KUSSCO, to ensure smoother operations going forward.
Inspector General Douglas Kanja assured the public that police investigations will be thorough, stating that individuals implicated in the misappropriation of funds will face legal repercussions. Additionally, a specialized unit within the Directorate of Criminal Investigations (DCI) has been established to examine the report’s findings and ensure accountability for affected entities, setting a precedent for integrity in these organizations.
The investigation into KUSSCO emphasizes the necessity of stringent regulatory frameworks to combat financial malpractice in cooperative societies. The revelations from the forensic audit highlight significant mismanagement and irregularities, prompting the government’s intervention. With legislative support and concentrated investigations, the goal is to recover losses, restore public trust, and prevent future financial misconduct.
Original Source: www.kenyanews.go.ke
