Co-operatives Cabinet Secretary Simon Chelugui has dismissed Kenya Union of Savings and Credit Union Directors.
In a statement to Newsrooms on Monday May 6, 2024, the CS stated that this is in line with agenda of ensuring integrity in co-operatives.
Chelugui added that the Ministry of Co-operatives and Micro, Small and Medium Enterprises (MSMEs) Development underscores its unwavering commitment to upholding principles of good corporate governance and integrity within the cooperative sector.
“As custodians of cooperative resources, we remain steadfast in our duty to ensure responsible and transparent management for the benefit of all stakeholders,” he stated.
The move to dismiss Kenya Union of Savings and Credit Union Directors was informed by the findings of an inspection conducted by the Commissioner for Cooperative Development in October 2023.
The inspection revealed significant discrepancies in the management and operations of a Kenya Union of Savings and Credit Union.
The CS noted that 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.
Subsequently, the Ministry appointed Grant Thornton, a reputable auditing firm, to conduct a thorough examination of the union’s financial affairs.
Preliminary findings indicate systemic deficiencies in the management of resources, including creative and unreliable financial records.
High Cash withdrawals out of character with expected operations Kshs 5,466,016,687 between February 2013 and April 2024.
Suspicious cash transfers to Company Secretary KUSCCO Housing – Kshs 318,160,172Loans to senior KUSCCO staff and directors (including subsidiaries) Group Managing Director Kshs 50 Million Company Secretary KUSCCO Housing Society Kshs 4.5 Million, Head KUSCCO Housing Co-operative Kshs 7M Double purchase of the same land (LR 23269/35) Kshs 80,546,000Suspicious cash transfer of funds to Insurance Agencies – Kshs 434,160,379Cash transfers from KUSCCO accounts to their staff accounts Group Managing Director Kshs 67,035,752.35 and two other members of staff each Kshs 118,046,999.90 and Kshs 15,986,289.00 respectively.
Inter Subsidiary Cash transfers.KUSCCO Operating unregulated FOSA – KUSASA – Neither a registered FOSA nor Microfinance.
Irregular account opened for KUSASA under KUSCCO CIF Customers’ cheques received at KUSASA endorsed and deposited at KUSCCO account for clearing.
The bank not indemnified on third party cheques.
“It has come to light that despite incurring losses, the union proceeded to declare bonuses, dividends and interest a practice that cannot be condoned.In light of these egregious lapses, a consultative meeting convened on 25th April 2024, with representatives from depositors reached a unanimous consensus on the future of the Union.It was concluded that the current board of directors has failed in its duty to steer the union effectively. Consequently, in the interest of ensuring accountability and restoring confidence, the Ministry has taken decisive action on this matter. 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,” stated Chelugui.
Further, the Commissioner for Cooperative Development is directed 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.
Chelugui says this interim board will be tasked with overseeing the transformation and rehabilitation of the union, with the full support of a dedicated technical team.
“The Ministry remains resolute in its commitment to fostering a culture of transparency, accountability, and ethical conduct within the cooperative sector. We will spare no effort in safeguarding the interests of cooperative members and promoting sustainable development across all facets of cooperative enterprise,” he stated.
