Preliminary review puts KUSCCO losses blamed on fraud at Sh12bn » Capital News
NAIROBI, Kenya, Nov 21 – Cooperatives Cabinet Secretary Wycliffe Oparanya has reported a Sh12 billion loss blamed on mismanagement of the Kenya Union of Savings and Credit Co-operatives Union (KUSCCO).
The findings, according to a preliminary review of KUSCCO’s financial records, follow the dismissal of the union’s board earlier in the year by former Cabinet Secretary Simon Chelugui.
Chelugui had cited deficiencies in resource management.
Speaking on Thursday while receiving a forensic report on KUSCCO, Oparanya stated that the findings highlighted significant mismanagement of resources, which resulted in the deficit.
“This report indicates that KUSCCO is insolvent, with a deficit of Sh12 billion. Resources were diverted into unauthorized areas, and oversight mechanisms were inadequate due to the lack of proper legal frameworks governing KUSCCO’s operations. The mismanagement of resources led to this situation,” Oparanya said.
The Cabinet Secretary added that relevant stakeholders will take action against those responsible for the resource mismanagement upon reviewing the full report.
Manipulated records
Chelugui dismissed KUSCCO board of directors on May 6, 2024, for failing to steer the union effectively. He constituted an interim board comprising 15 members drawn from leaders of affiliate cooperatives to oversee the union’s rehabilitation.
Former CS Chelugui had accused the board of inappropriate practices, such as declaring bonuses, dividends, and interest payments despite the union incurring significant losses.
Chelugui further pointed out that the dismissed board had been repeatedly mismanaging the union’s resources, including maintaining unreliable and creatively manipulated financial records.
“Effective immediately, I, the Cabinet Secretary for Cooperatives and Micro, Small, and Medium Enterprises (MSMEs) Development, announce the dismissal of the current board of directors,” Chelugui said at the time.
“It [was] concluded that the board failed in its duty to steer the union effectively,” he added.
The government tasked the newly appointed interim board to oversee the transformation and rehabilitation of KUSCCO to restore financial stability and public trust in the institution.
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