Simon Chelugui during vetting by MPs in Nairobi on October 22, 2022. [Kelly Ayodi, Standard]
Cabinet Secretary for Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Simon Chelugui has today, May 6, disbanded the board of the Kenya Union Savings and Credit Cooperatives (KUSCCO) on the grounds of mismanagement.
A section of managers and some administrators have also been dismissed to pave the way for an audit of the organization’s accounts.
"Further, the Commissioner for Cooperative Development is directed to appoint an interim board comprising fifteen members drawn from esteemed leaders of affiliate cooperatives, per the Cooperative Societies Act CAP 490 Laws of Kenya,” read a statement from CS Chelugui.
The new board is expected to steer KUSCCO’s transformation drive with the help of a technical team.
An October 2023 inspection conducted by the Commissioner for Cooperative Development lifted the lid on administrative errors at the body.
Further analysis of KUSCCO finance records conducted by Grant Thornton auditing firm laid bare irregularities in finance management on the watch of the board and top managers.
The audit unearthed suspicious withdrawals amounting to more than five billion shillings transacted between 2013 and 2024.
For instance, KUSCCO made a suspicious transfer of Kshs. 318 million shillings to the KUSCCO Housing Society secretary.
The same official is again listed among senior staff who received hefty loans in an arrangement where the Managing Director received a Kshs 50 million loan.
Further, the organization suffered a preventable loss relating to a double purchase of a single piece of land where Kshs. 80.5 million was spent.
KUSCCO also made questionable cash transfers to staff, including the Managing Director, who received Kshs. 67 million while two other staff members received Kshs. 118 million and Kshs. 15 million each.
Insurance agencies also walked away with Kshs. 434 million in unclear circumstances.
CS Chelugui has implicated the board in the mess for failing to “steer the union effectively”.
KUSCCO is an umbrella body offering financial and technical support to Savings and Credit Cooperative Societies (SACCO) countrywide.