Former KUSCCO Chairman Among Four Arrested By DCI Over Sh13B Fraud

Former chairman of the struggling Kenya Union of Savings & Credit Co-operatives Ltd (KUSCCO) George Magutu Mwangi was among four people who were arrested in an operation by the Directorate of Criminal Investigations (DCI) over claims of financial mismanagement at the  agency.

Jackline Pauline Atieno Omolo, George Ochola Owino, Mercy Njeru, and George Magutu Mwangi face multiple charges, including conspiracy to defraud, contrary to Section 317 of the Penal Code.

“The National Police Service, through the Directorate of Criminal Investigations, has launched investigations into the Kenya Union of Savings & Credit Co-operatives Ltd (KUSCCO) scandal,” the Police Service confirmed on Thursday.

The State will also charge the suspects with stealing by directors or officers of companies and making a false document, both offenses under the law.

Their arrests follow the submission of a forensic audit report to Inspector General of Police Douglas Kanja by Cabinet Secretary for Cooperatives and MSMEs Wycliffe Oparanya on Wednesday.

Gross mismanagement

The report exposed gross mismanagement, financial irregularities, and potential criminal activities within KUSCCO, Kenya’s apex cooperative body.

Oparanya disclosed that the forensic audit highlighted non-performing loans amounting to Sh3.7 billion, overstated profits of nearly Sh798 million over the last six years, irregular commissions totaling Sh2.7 billion and mismanagement of the central finance fund to the tune of Sh1.3 billion.

“KUSCCO was established in 1973 as the umbrella body for SACCOs across Kenya, but its management veered from its core mandate, engaging in unsanctioned financial activities without proper regulatory oversight,” Oparanya stated while presenting the report.

He emphasized that the mismanagement led to operational inefficiencies, regulatory non-compliance, and significant financial losses.

Following the report, the CS directed Inspector General Kanja and his team to commence immediate and expedited investigations, which led to the arrests within hours.

The DCI revealed that three suspects were arrested in different areas within Nairobi County, while George Magutu Mwangi was apprehended in Nyeri County.

Investigations are still underway to further uncover mismanagement and fraud within the cooperative body.