The Ministry of Cooperatives and MSME Development has submitted a forensic audit report to Parliament, uncovering widespread financial mismanagement at the Kenya Union of Savings and Credit Co-operatives (KUSCCO) involving billions in irregular loans and undisclosed deposits.

The report, which follows a forensic audit commissioned in October 2023, places KUSCCO’s loan portfolio at Sh6.47 billion, with Sh3.37 billion from the Central Finance Fund, Sh2.9 billion under Koscco Housing Rural, and Sh191.7 million via KUSASA.

Of note, senior staff and board members received questionable loans, including Sh27.9 million to George Ototo, Sh9.3 million to George Owing, and Sh4.5 million to Kenneth Kimaiyo.

Directors named in the report include George Majutu, Wilfred Aima, Alfred Mlolwa, David Moya, David Ogega, Andrew Orwach, and Benard Ngunjiri. PwC, which is reconstructing KUSCCO’s loan book, noted that final figures could vary.

The Ministry also confirmed that members’ fixed deposits were not fully remitted, with both principal and interest still pending.

Cabinet Secretary Wycliffe Oparanya said that the report has been handed to investigative agencies and that prosecutions are underway. Several former executives, including the Group Managing Director and Finance Manager, have already been arraigned.

In response, the Ministry disbanded the entire KUSCCO board in December 2023 and appointed an interim one for 90 days. It also sent four senior staff, including the CEO, on compulsory leave pending further probe.

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The audit revealed systemic issues, including falsified financial statements, fund diversion, and non-viable investments that masked KUSCCO’s insolvency. Despite this, the union had received clean audit opinions for years, casting doubt on past oversight.

"This was a deliberate effort to conceal financial rot,” the Ministry reported. Investigations and prosecutions are ongoing.