CS Chelugui Disbands Sacco Board of Directors, Here’s Why

Co-operatives & Micro, Small and Medium Enterprises (MSMEs) Cabinet Secretary Simon Chelugui has dismissed the Board of Directors of the Kenya Union of Savings and Credit Cooperative Society Ltd (KUSCCO) over graft allegations.

Chelugui said the decision comes after findings of an inspection conducted by the Commissioner for Cooperative Development in October 2023 revealed significant discrepancies in the management and operations of KUSCCO.

In a statement on May 6 the CS said that a consultative meeting convened on 25th April 2024 concluded that the current board of directors had failed in its duty to steer the union effectively.

“In response to these findings, immediate administrative measures were taken, including the dismissal of implicated top managers and administrators, to facilitate a comprehensive audit of the union’s operations and financial records,” the statement read in part.

“Effective immediately, I, the Cabinet Secretary for Cooperatives and Micro, Small and Medium Enterprises (MSMEs) Development, hereby announce the dismissal of the current board of directors.”

Chelugui Dismisses Sacco Union Board

Further, the CS directed Commissioner for Cooperative Development to appoint an interim board comprising fifteen members drawn from esteemed leaders of affiliate cooperatives, in accordance with the Cooperative Societies Act CAP 490 Laws of Kenya.

However, this interim board will be tasked with overseeing the transformation and rehabilitation of the union, with the full support of a dedicated technical team.

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Consequently, in the interest of ensuring accountability and restoring confidence, the Ministry has taken decisive action on this matter.

Grant Thornton, a reputable auditing firm has been appointed to conduct a thorough examination of the union’s financial affairs.

Findings Reveal How KUSCCO Officials Mismanaged Funds

Preliminary findings from the investigations indicated systemic deficiencies in the management of resources, including creative and unreliable financial records.

These included high cash withdrawals out of character with expected operations amounting to Ksh.5,466,016,687 between February 2013 and April 2024 and suspicious cash transfers to Company Secretary KUSCCO Housing of Ksh. 318,160,172.

Furthermore, loans were awarded to senior KUSCCO staff and directors (including subsidiaries) including the Group Managing Director with Ksh.50 million.

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Other officials given loans were the Company Secretary KUSCCO Housing Society with Ksh. 4.5 million and Head KUSCCO Housing Co-operative who was given seven million.

Further revelations included double purchase of the same land (LR 23269/35) with Ksh. 80,546,000 and suspicious cash transfer of funds to Insurance Agencies amounting to Ksh.434,160,379.

Also, the investigations revealed sash transfers from KUSCCO accounts to their staff accounts where the Group Managing Director received Ksh 67,035,752.35 and two other members of staff received each Ksh.118,046,999.90 and Ksh. 15,986,289.00 respectively.

Chelugui said the ministry will spare no effort in safeguarding the interests of cooperative members and promoting sustainable development across all facets of cooperative enterprise.

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