KUSCCO Board and Senior Managers May Face DCI Criminal Probe

The Kenya Union of Savings and Credit Co-operatives Society (KUSSCO) Limited is facing the prospect of an active criminal investigation by the Directorate of Criminal Investigations (DCI).

This investigation targets the board of directors and select senior managers of the beleaguered saccos lobby. The inquiry focuses on suspected financial fraud, irregular loan advances among board directors and senior managers, and other economic crimes.

This criminal probe runs parallel to an ongoing investigation by the Sacco Societies Regulatory Authority (SASRA) regarding alleged illegal activities and engaging in unauthorized deposit-taking business by KUSSCO.

The latter has sought legal intervention to halt the SASRA investigation.

Sources within KUSSCO and the DCI indicate that the investigation has taken a new turn, uncovering a suspected clandestine financial fraud involving illegal loan advances to insiders.

Additionally, allegations of manipulated financial records, including discrepancies in sacco deposits and actual funds held by KUSSCO Limited, are being probed.

A key focus of the inquiry is the inter-lending facility known as the Central Finance Fund (CFF), a platform used by all deposit-taking saccos affiliated with KUSSCO.

This facility operates similarly to inter-bank lending used by banks but without the required license for running sacco businesses. The financial capital for KUSSCO’s CFF comes from regular deposits by affiliated SACCOs, with the lobby paying interest on these deposits, subsequently disbursed quarterly to its member societies.

Insiders have reported that the board appeared before the Commissioner of Co-operatives on December 15, 2023, with a closed-door meeting held at the headquarters that same morning. The DCI is actively involved in the matter.

When contacted for comments, both KUSSCO Managing Director George Ototo and KUSSCO board chairman George Magutu declined to respond, requesting a formal request for board consideration.

If found guilty, the officials could face prosecution, conviction, and potential forfeiture of assets acquired through proceeds of crime.

The investigative actions were prompted by revelations from Co-operatives and Micro Small and Medium Enterprises (MSMEs) Development Cabinet Secretary Simon Chelugui.

He directed SASRA to inspect KUSSCO’s books, accounts, and records due to concerns about the society carrying out regulated Sacco businesses without the required licenses.

Chelugui’s directive followed information received from various sources and submissions by SASRA, indicating potential violations of the Sacco Societies Act No. 14 of 2008.