KUSCCO Fraud: Exposes Massive Loan Scandal by Former SACCO Executives

In a shocking revelation, Cabinet Secretary for Cooperatives and MSMEs, Wycliffe Oparanya, has unveiled a massive financial KUSCCO Fraud. The forensic audit, conducted by PricewaterhouseCoopers (PwC), uncovered that former top executives of KUSCCO had misappropriated over KSh 13.3 billion, plunging the organization into insolvency with a deficit of KSh 12.5 billion.

The KUSCCO Scandal Unfolds

KUSCCO, which for decades served as the backbone of Kenya’s Sacco movement, is now at the centre of an extensive fraud investigation. Recent reports confirm that the organization is struggling with debt, liquidity challenges, and loss of credibility among its member Saccos.

The biggest shock came when Wycliffe Oparanya publicly disclosed the details of irregular loans taken by former KUSCCO managers. According to Oparanya, some individuals received multi-million-shilling loans under suspicious circumstances — without proper collateral, security, or approval from legitimate Sacco structures.

Breakdown of Loans Taken by Former KUSCCO Officials

The audit revealed that several former officials had taken substantial loans without proper authorization or collateral. The amounts borrowed by these individuals are as follows:

No.	Name	Amount Borrowed (KSh)
1	George Ototo	113,114,609
2	George Owino	17,982,660
3	Kenneth Kimaiyo	9,505,004
4	George Magutu	4,143,117
5	Wilfred Aima	7,616,009
6	Alfred Mlolwa	6,394,507
7	David Moiya	13,570,224
8	David Ogega	20,586,126
9	Andrew Okwach	7,799,914
10	Bernard Ngunjiri	2,071,862

These loans were often disbursed without adherence to KUSCCO’s lending policies, with some officials receiving amounts far exceeding their savings.

Additional Findings from the Forensic Audit

The PwC audit uncovered several other irregularities, including:

• Non-Performing Loans: KUSCCO had accumulated non-performing loans totaling KSh 3.7 billion, indicating a lack of proper credit risk assessment and management.
• Overstated Profits: The organization’s profits were overstated by nearly KSh 798 million over six years, misleading stakeholders about its financial health.
• Irregular Commissions: Payments amounting to KSh 2.7 billion were made as commissions without proper justification or documentation.
• Mismanagement of Funds: The central finance fund was mismanaged to the tune of KSh 1.3 billion, with funds being diverted for unauthorized purposes.
• Forgery and Fraudulent Reporting: Financial statements were manipulated, including the use of forged signatures from deceased auditors, to conceal the organization’s true financial state.

Government’s Response and Legal Actions

In response to these findings, CS Wycliffe Oparanya has handed over the audit report to the Inspector-General of Police, Douglas Kanja, for further investigation and prosecution of those involved.

Several former officials, including George Magutu Mwangi, Mercy Muthoni Njeru, George Ochola Owino, and Jackline Pauline Atieno, have already been arrested and charged with various offenses, such as conspiracy to defraud and making false documents.

The government has also taken over KUSCCO’s lending unit to recover the lost funds and prevent further mismanagement. Additionally, a comprehensive restructuring plan is underway to restore confidence in the cooperative sector, including the implementation of stricter regulatory frameworks and enhanced oversight mechanisms.

A Cautionary Tale for the Cooperative Movement

The KUSCCO fraud saga serves as a wake-up call for Kenya’s cooperative sector. What was once seen as a pillar of grassroots financial empowerment is now tainted by greed, mismanagement, and lack of accountability.

As investigations continue and pressure mounts on authorities to bring the culprits to justice, Sacco members across the country are watching closely — hoping for reforms that will restore trust and protect their hard-earned savings.

Implications for the SACCO Sector

The KUSCCO fraud has exposed significant regulatory gaps in Kenya’s cooperative sector, particularly concerning apex bodies like KUSCCO that previously operated with minimal oversight.

The scandal has jeopardized the savings of millions of Kenyans and highlighted the urgent need for reforms to safeguard members’ funds and ensure transparency and accountability within SACCOs.

As the government intensifies its efforts to bring the perpetrators to justice and implement necessary reforms, it is hoped that these measures will restore trust in the cooperative movement and prevent similar incidents in the future.

Conclusion

The KUSCCO fraud involving massive loans issued to former managers is not just about stolen money — it’s about betrayed trust. Wycliffe Oparanya’s revelations have pulled back the curtain on what many insiders believe is just the tip of the iceberg.

Unless urgent action is taken, the damage to Kenya’s cooperative economy could be long-lasting. This is a defining moment for accountability, governance, and transparency within the Sacco movement.