Kuscco housing unit boss fires back in missing Sh1.6b legal tussle

The blame game between the Kenya Union of Savings and Credit Cooperatives (Kuscco) management has intensified, with its housing unit Chief Executive Julius Odera turning the heat on the Managing Director Arnold Munene over the ongoing corruption probe at the Saccos' umbrella body. The legal tussle comes in the wake of a corruption scandal at the umbrella organisation for cooperatives, leading to the loss of Sh13.3 billion. Kuscco is undergoing restructuring under the watchful eye of the State Department for Co-operatives and the industry regulator Sacco Societies Regulatory Authority (Sasra). About Sh13 billion of Sacco members' savings are suspected to have been mismanaged over the years by previous Kuscco management, some of whom are now in court facing fraud charges. Some of the subsidiaries associated with the giant union are earmarked for sale in a bid to recover the lost funds. As part of the ongoing restructuring at Kuscco, the umbrella union has sued Mr Odera, seeking to compel him to pay some Sh1.6 billion, which allegedly cannot be accounted for on his watch. But Mr Odera has denied any wrongdoing and shifted the blame to Mr Munene. "The defendant [Odera] denies the contents of paragraph five of the plaint and, in particular, that he engaged in acts and omissions resulting in financial loss and damage to the reputation of the plaintiff," his reply, filed by lawyer Kenneth Nyamollo, reads in part. According to Mr Nyamollo, his client has not been given a fair opportunity to give his side of the story, which he asserts would vindicate him. He says numerous documents can show that Mr Odero has not mismanaged funds, violated any governance procedures, or led Kuscco to incur any loss. Mr Odero's lawyer in the documents filed before High Court Judge Prof Nixon Sifuna states that the minutes of the Kuscco Housing Board dated October 27, 2023, commended him and his department "for a splendid job done." Mr Odero says both Kuscco and its subsidiary policies clearly state that all loans are approved by the credit committee, not by him, as alleged in the case. In a counter-accusation against Munene, he alleges that the case was meant to conceal financial impropriety in Kuscco Ltd. "The plaintiff's corporate integrity was on the balance when the plaintiff, through its current group managing director, decided to request and pay off commissions that were beyond the institution's revenues and that the defendant never approved any of these, and the plaintiff is put to strict formal proof of the mismanagement of funds and resources by the defendant," he alleges. In a case filed by lawyer Cecil Miller, Kuscco Ltd alleges that Mr Odera, who was heading its Kenya Union of Savings and Credit Cooperatives Ltd Housing Cooperative (KHC) unit, is solely to blame for the unaccounted funds. Mr Miller says Mr Odera was first employed as an assistant accountant in its Central Finance Fund (CFF) department within Kuscco Housing Fund (KHF) before being promoted to the position of manager in 2013 until 2019, when he was appointed as the CEO of KHC. He claimed that Mr Odera was found culpable of financial misconduct outlined in the Forensic Audit Report Extract issued in March 2025. According to Mr Miller, Mr Odera was responsible for developing the organisation's homes project. It accused him of paying vendors at least Sh1.2 billion without evidence of the procurement process. But in his reply, Mr Odero argues that the audit report was not signed or dated. He also claims that the report had been customised to fit the narrative in a bid to have him suspended from his position. According to him, the report clearly states that it was anchored on interviews by the audit firm Price Waterhouse Coopers (PWC), which could not be verified. He claimed the report was for the parent cooperative, not the housing unit. "All these allegations emanate from the purported, unsigned, undated extract of the forensic report by PricewaterhouseCoopers Kenya on Kuscco's affairs. Paragraph A 4 limitations contain disclaimers that the procedures performed did not constitute an examination or review in accordance with accepted auditing standards and, accordingly, were unable to express an opinion as they did not audit or verify information supplied to them from any source," he says in court documents. He also notes that the Business and Budget Committee approves or rejects all loans; hence, he could not have approved Sh 170.5 million without their knowledge. Mr Odero has also distances himself from Kuscco's claim on the loss of the said Sh1.2 billion procurement deak. He says the procurement committee made all procurement contracts, awards, and approvals, which the then-finance manager allegedly chaired. At the same time, he said, Mr Munene approved them. He says he couldn't have awarded himself a tender worth Sh1.2 billion without considering the internal and external audits. He also denies diverting Sh7.7 million, saying that there was no evidence to show the same ever happened, in addition to a Sh1.7 million M-Pesa claim, which he said Kuscco did not indicate its use. According to him, payments were authorised and paid upon charging the relevant property to Kuscco Ltd, and payment vouchers were authorised at various levels up to the board level. " No payment can be done by the Housing Fund Manager himself, and the plaintiff is put to strict formal proof on how Sh28 million was paid by the Housing Fund Manager," argues Mr Odero in court filings. He also says there is a caretaker for the Kuscco Ltd homes, who is a staff member of Kuscco, and an accountant who does monthly reconciliation of the rent collected, and it is not clear how he allegedly mismanaged the Sh13 million. He further argues that the money has not been traced to his account. Mr Odera maintains that there was no evidence of mismanagement or wrongdoing on his part, adding that the case was founded on bad faith and an abuse of court procedures. "The publication was engineered by none other than the plaintiff himself as the author of their misfortune. This suit is tainted with malice and bad faith, ill-conceived, lacking ripeness, and illegal and constitutes an abuse of the court process, as the dispute is that between cooperative societies under Section 76 of the Cooperative Societies Act and should be struck out with costs," he says. The case will be mentioned on June 24. The Kuscco scandal has also seen the role of the Commissioner for Cooperative Development questioned as affiliated societies' officials fight a directive to dismiss them from office. A directive from the Commissioner for Cooperative Development that roped in the courts in December 2024 sought to have former Kuscco board officials be barred from holding any position in the Sacco societies due to their dismissal from the union. This followed the disbandment of the Kuscco board by the then-Cooperatives and Micro, Small and Medium Enterprises Development Simon Chelugui in May 2024. However, the officials, who are directors and executives in Kuscco member Saccos, have refused to go down without a fight in affidavits that now put the role of the Commissioner for Cooperative Development, a position that is currently held by David Obonyo, at the centre of the Sh13 billion saga. In one of the affidavits, Andrew Ayarah Okwach argues that officials can only be removed through the by-laws of their primary Saccos and not a directive from the Commissioner for Cooperative Development.

Kuscco housing unit boss fires back in missing Sh1.6b legal tussle

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Kuscco housing unit boss fires back in missing Sh1.6b legal tussle

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