DCI Detectives Pursue New Fortis Sacco Treasurer George Magutu as Audit Links Him to Sh13 Billion Kuscco Fraud; Are Customers’ Funds at Risk?

In a significant development in the ongoing investigation into the financial scandal at the Kenya Union of Savings and Credit Cooperatives (Kuscco), detectives from the Directorate of Criminal Investigations (DCI) are now actively pursuing George Magutu, the current treasurer of New Fortis Sacco and former chairman of Kuscco.

The pursuit follows a detailed forensic audit that uncovered the shocking theft of Sh13.3 billion from Kuscco, implicating senior officials, including Magutu.

Kuscco Scandal Unveiled

The audit, conducted by PricewaterhouseCoopers, revealed a complex web of fraudulent activities within Kuscco, including the forgery of financial statements, misappropriation of funds, and payment of unauthorized commissions.

Among the high-profile figures implicated in the scandal are George Ototo, the former managing director; George Owino, the finance manager; and George Magutu, who served as chairman at the time of the alleged misdeeds.

The audit report detailed how these officials, through various schemes, siphoned off billions, leaving Kuscco insolvent with a reported deficit of Sh12.5 billion.

Magutu’s Role in New Fortis Sacco

George Magutu’s involvement extends beyond Kuscco. He currently serves as treasurer at New Fortis Sacco, one of Kenya’s prominent cooperative societies.

Recent social media posts have highlighted concerns among New Fortis members, given Magutu’s implication in the Kuscco scandal.

There are fears that similar mismanagement may have occurred at New Fortis, where Magutu has been a long-standing official.

Customers’ Funds at Risk

Cooperatives and Micro, Small, and Medium Enterprises (MSMEs) Cabinet Secretary Wycliffe Oparanya has issued a stern warning regarding the safety of depositors’ funds in institutions linked to the scandal. He stated that while the recovery process for the lost billions might be initiated, it would likely be protracted, suggesting that members of affected Saccos should prepare for potential financial losses.

This warning is particularly alarming for New Fortis customers, given Magutu’s role there and his entanglement in the Kuscco fraud.

New Fortis Sacco Entangled in Sh10 Billion UFAA Scandal

New Fortis Sacco’s troubles are not limited to the Kuscco scandal. The society has also been implicated in a Sh10 billion scandal involving the Unclaimed Financial Assets Authority (UFAA), with allegations of fraud.

In 2024, a report by auditors contracted by UFAA flagged over Sh10 billion in unclaimed funds as unaccounted for. The agency has struggled to trace the growing amount of unclaimed assets to their rightful owners, according to recent reports by the state-backed Auditor General.

There were allegations that billions of shillings worth of unclaimed assets handed over to UFAA by various institutions had been misappropriated. These assets include idle cash, shares, and dividends, mostly left behind by deceased individuals. It was also alleged that rogue UFAA and banking officials colluded in the misappropriation, citing a case involving New Fortis Sacco, which allegedly had unclaimed assets worth Sh80 million that were suspiciously reduced to Sh848,000. Coincidentally, Magutu was serving—and continues to serve—as the Sacco’s treasurer.

Legal and Financial Implications

The implications for New Fortis Sacco are severe. The DCI’s investigation into Magutu could lead to his arrest and prosecution, potentially affecting the governance and operational integrity of New Fortis. The cooperative sector is bracing for further revelations as the DCI, in collaboration with other investigative agencies, delves deeper into the matter, with a specific focus on asset recovery and the prosecution of those involved.

Biggest Losers

New Fortis Sacco Society is one of the top-tier Saccos in Kenya’s cooperative sector. The Nyeri-based Sacco holds 830,529 shares in Kuscco, representing 3.56% of the total. Given these figures, it is among the Saccos at the highest risk of losing billions of customers’ funds in the wake of the Kuscco fraud.

Kuscco is 100% owned by subscribed Sacco societies, with top cooperatives such as the Kenya National Police DT Sacco and Harambee Sacco holding the largest shares. Other Saccos at high risk of losing their customers’ deposits due to their shares in Kuscco include Nacico Sacco, Gusii Mwalimu Sacco Society Limited, Kenya Medical Association Ltd, Magereza Staff Sacco Society Ltd, Imarisha Sacco Society Ltd, and the Noble Society Ltd.

Public and Member Reaction

The news has sparked widespread concern among cooperative members, not only at New Fortis but across the sector. There is an increasing demand for transparency, accountability, and robust governance structures to prevent such large-scale financial malfeasance. Posts on social media platform X have captured the public’s sentiment, with many expressing dismay and calling for immediate action to safeguard their savings.

Looking Ahead

As the saga unfolds, Kenya’s cooperative sector faces a crucial test of its resilience and governance. The outcome of this investigation could set precedents for how financial crimes within cooperative societies are addressed, potentially leading to stricter regulations and oversight. For now, New Fortis Sacco members remain in limbo, watching closely as the legal and financial ramifications of George Magutu’s involvement in the Kuscco scandal come to light.