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Police Sacco Lost Sh200 Million in Kuscco Fraud

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NAIROBI — The Kenya National Police Deposit Taking Sacco suffered a Sh200 million loss due to the massive fraud scandal at the Kenya Union of Savings and Credit Cooperatives (Kuscco), according to a new report by South African credit rating agency GCR Ratings.

Despite this significant financial blow, the Police Sacco has maintained its A- credit rating with a stable outlook, indicating the institution’s continued “high credit quality and strong ability to meet its short-term obligations,” the agency stated.

GCR Ratings attributed the maintained rating to the Sacco’s “strong capitalisation, reliable funding and asset quality” despite the substantial loss incurred through the Kuscco fraud.

In addition to the Kuscco-related loss, the report revealed that Police Sacco customers exploited a system vulnerability to withdraw Sh140 million beyond their authorized limits. “All funds except Sh3 million have been recovered through member deposits and refunds and ICT processes have been updated and strengthened to mitigate this risk,” GCR noted in its assessment.

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The Police DT Sacco currently stands as the third-largest among Kenya’s 174 deposit-taking saccos, with an impressive asset base of Sh59 billion, a loan portfolio of Sh50 billion, and member deposits totaling Sh34 billion. Its membership of 74,305 is drawn primarily from police officers and civil servants.

The organization recently faced internal challenges when eight members requested an investigation by the Director of Criminal Investigations (DCI) over allegations of embezzlement by sacco officials. These investigations were successfully contested by the officials, who argued that regulatory oversight falls under the jurisdiction of the Sacco Societies Regulatory Authority (Sasra).

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Despite absorbing the Sh200 million loss, the Police DT Sacco increased its dividend payout by four percent to Sh624 million for the financial year ending December 2024, countering the government’s recommendation for saccos to freeze dividend payments to help absorb losses from the Kuscco fraud.

The Kuscco scandal has sent shockwaves through Kenya’s cooperative movement, with estimates suggesting around Sh12 billion was misappropriated from deposits collected from member saccos across the country. In response, the government has assumed control of certain Kuscco operations in an effort to recover misappropriated funds.

Industry observers note that the Kuscco fraud has highlighted significant regulatory gaps, as the umbrella body operates outside the direct supervision of Sasra, despite years of warnings about this oversight vacuum.

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For Kenya’s cooperative movement, which manages trillions in savings, the ongoing fallout from the Kuscco scandal represents one of its most significant challenges in recent history, raising urgent questions about governance and oversight in the sector.


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