Kuscco, the Kenya Union of Savings and Credit Cooperatives, is at the center of a major financial scandal following an audit report by PricewaterhouseCoopers (PwC).
The report has uncovered that Kuscco executives forged the signature of a deceased auditor to approve falsified financial records, exposing a fraud amounting to Sh13.3 billion.
This revelation has thrown the organization into financial turmoil, with its insolvency now standing at Sh12.5 billion. The crisis puts Sh24.8 billion in deposits from 247 saccos at serious risk, raising concerns among depositors and stakeholders.
The audit findings reveal a web of financial irregularities within Kuscco. One of the major issues uncovered is the manipulation of financial records to hide losses.
Instead of reporting the true financial state, executives allegedly altered figures to create the illusion of profitability.
This misrepresentation kept saccos and depositors in the dark about the institution’s growing financial troubles. The falsified profits masked deep-rooted problems, delaying any necessary intervention and allowing the fraud to continue unchecked.
The report also points to large-scale bribery involving top executives. Senior officials are accused of engaging in corrupt deals, using bribes to ensure their fraudulent activities remained hidden.
This corruption extended to key decision-making processes, where executives allegedly used their influence to cover up financial mismanagement.
The unchecked bribery not only compromised Kuscco’s integrity but also weakened its governance structures, making it easier for the fraud to escalate.
Unexplained bank withdrawals further compound the financial scandal. Large sums of money were reportedly withdrawn without proper documentation or justification.
These withdrawals raise questions about whether the funds were embezzled for personal gain or funneled into other fraudulent schemes.
The lack of transparency in these transactions suggests that Kuscco’s financial systems were compromised for an extended period, with little oversight or accountability.
The awarding of contracts to firms linked to top managers also emerged as a major red flag in the audit report.
Instead of following standard procurement procedures, Kuscco executives allegedly directed lucrative contracts to companies connected to them.
These contracts, often inflated, drained resources from the organization and contributed to its financial collapse. The fraudulent deals ensured that executives and their associates benefitted at the expense of depositors and member saccos.
The extent of the fraud has left Kuscco in a critical financial state. With its insolvency now standing at Sh12.5 billion, the organization is unable to meet its financial obligations.
The risk to Sh24.8 billion in deposits has sent shockwaves through the cooperative sector, with affected saccos and depositors demanding accountability. The scandal raises serious concerns about regulatory oversight and the effectiveness of financial governance within cooperative societies.
The PwC audit report has exposed deep-rooted corruption and financial malpractice at Kuscco. The forging of a dead auditor’s signature to approve falsified records is just one example of the extreme lengths executives went to in order to conceal the fraud.
The manipulation of financial statements, large-scale bribery, unexplained withdrawals, and irregular contracts all point to a culture of impunity within the institution.
The scale of the fraud not only affects Kuscco but also threatens the stability of the wider cooperative sector. The fallout from this scandal is expected to be significant, with legal and regulatory actions likely to follow.
