Audit Reveals How Fired KUSCCO Directors Took Sh192M Loans Before Dismissal

Fired top executives and board members of the Kenya Union of Savings and Credit Co-operatives (Kuscco) had insider loans worth Sh192.8 million at the time of their dismissal, a forensic audit by PricewaterhouseCoopers (PwC) has revealed.

The loans were part of a wider scheme of financial mismanagement flagged in the audit, which exposed irregularities that put Sh13.3 billion in depositor funds at risk.

Co-operatives and Micro, Small and Medium Enterprises Cabinet Secretary Wycliffe Oparanya disclosed the figures in a statement responding to questions raised by Busia senator Okiyah Omtatah.

The highest loan was held by former Kuscco managing director George Ototo at Sh103.11 million. Former finance manager George Owino had borrowed Sh17.98 million, while former internal auditor Kenneth Kimaiyo owed Sh9.5 million.

Among the directors, David Ogega was listed with Sh20.58 million, David Moyia Sh13.57 million, Andrew Okwach Sh7.8 million, and Wilfred Aima Sh7.62 million.

Others included Alfred Mlolwa with Sh6.39 million, Bernard Ngunjiri with Sh2.07 million, and former chairman George Magutu, who owed Sh4.14 million.

PwC also noted that Kuscco officials had defaulted on insider loans totalling Sh489.2 million, with some surpassing the policy limit that allows loans of up to five times a member’s deposits.

The financial misconduct first came to light following an inspection by the Commissioner for Co-operative Development after several Saccos complained about being unable to access their deposits.

The inspection exposed falsified records by the top management, misuse of funds, and investments in projects that lacked viability.

In December 2023, after being presented with the preliminary findings, the Kuscco board placed four top executives, including the managing director, on compulsory leave.

A subsequent meeting of stakeholders led to the removal of the entire board, which was replaced with interim officials who then authorised the PwC forensic audit.

Several of those dismissed, including Ototo, Owino, Magutu, former legal officer Jackline Atieno, and former head of radio project Mercy Muthoni, were later arraigned in court over the alleged theft of Sh82.8 million from Kuscco. They all denied the charges.