UPDATE: The four suspects arrested in connection with the multi-billion-shilling fraud scandal at the Kenya Union of Savings and Credit Co-operatives (KUSCCO) will remain in custody until the determination of their bail terms on Tuesday, February 18, 2025.
The Directorate of Criminal Investigations (DCI) said in an X statement on Friday, February 14, that the four who were presented at the Milimani Law Courts are facing various charges including conspiracy to defraud, stealing by company directors, and making a false document.
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“As the four suspects cool their heels in the cells, the courts have issued summons to appear before the court to the former KUSCCO Managing Director, George Otieno Ototo who is required to appear for plea taking on the same day his co-accused persons will be awaiting the determination of the bond terms,” DCI said.
The four were arrested on Thursday for allegedly cooking financial statements and theft that put Ksh13.3 billion belonging to depositors at risk.
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The National Police Service in a statement on Thursday, February 13 said that it had set in motion investigations into the KUSCCO scandal through DCI which led to the arrest of three persons.
“The three, who were arrested in different areas within Nairobi County, now face several charges including Conspiracy to Defraud Contrary to Section 317 of the Penal Code, Stealing by Directors or Officers of Companies Contrary to Section 282 of the Penal Code and Making a False document Contrary to Section 347(a) as read with Section 349 of the Penal Code,” said NPS.
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Further to the case, one more suspect was arrested in Nyeri County.
The arrests come after the Inspector General of Police Douglas Kanja assured that NPS will leave no stone unturned in investigating the matter, as he received the KUSCCO forensic report from the Cabinet Secretary for Cooperatives and MSMEs Wycliffe Oparanya.
KUSCCO heist
CS Oparanya had on Tuesday handed the PricewaterhouseCoopers (PwC) forensic audit to IG Kanja for an in-depth probe and prosecution of those culpable.
The CS agreed with the PwC on the need for recovery of the lost billions of shillings that have left KUSCCO insolvent to the tune of nearly Ksh13 billion and placed the savings of 247 Saccos at stake.
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The forensic audit revealed that the Sacco’s cooked financial accounts were signed by a dead auditor — Alfred Basweti of Omenye and Associates — pointing to forgery.
“I request several agencies to undertake the necessary legal and administrative action upon further investigation to support litigation about criminal and economic crimes culpability and also commence the process of asset recovery,” said Oparanya.
The forgery of the signature joins a list of misfeasance at KUSCCO that includes cooking of books, large-scale theft by executives, bribery, unexplained bank withdrawals and conflict of interest through issuance of contracts to firms owned by top managers and masking the schemes through manipulation of financial statements to report non-existent profits.
Ksh13.3 billion lost
The 208-page PwC audit retrieved the trove of incriminating information from M-Pesa statements, e-mails, computer logs, and documents of at least 23 top managers at the Sacco in a review that placed eight executives in the spotlight.
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They included then managing director George Ototo, finance manager George Owino and Chairman George Magutu.
At the end, Ksh13.3 billion has been lost, leaving the umbrella body of Saccos insolvent to the tune of Ksh12.5 billion, putting at risk the Ksh24.8 billion it received from Saccos.
Oparanya further said the complex web of fraudulent transactions including manual entries and cash dealings to exclude banking trail indicates that the in-depth probe may take longer to conclude, warning that Saccos may not recover billions of shillings lost in the scheme.
“We have already met KUSCCO members and pointed out to them that they are unlikely to recover this money. And even if the recovery process is undertaken, it will take too long,” he said.
On Tuesday, IG Kanja confirmed that he was forming an investigating team with DCI for a deeper probe and punishment of the culprits.
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