How Sacco’s Have Suffered Huge Losses Through Fraudulent Activities

Some of Sacco’s whose questionable financial activities have come to the public domain include the giant Mwalimu Sacco which is currently embroiled in the controversial acquisition of a struggling Spire Bank

By Our Investigative Team

Massive internal financial haemorrhaging has hit most of the Saccos in Kenya with annual internal scams that demand deep forensic audits to be conducted by independent institutions. According to government statistics as at the end of the last financial year, the country’s cooperative movement had accumulated more than Ksh. 1.2 trillion in savings and assets, a prime target for ingenious crafty looters.

The worst affected are the movement’s top Savings and Credit Cooperative (Sacco) societies most of which are headquartered in Nairobi with massive membership that cuts across all counties in the country. Some of Sacco’s whose questionable financial activities have come to the public domain include the giant Mwalimu Sacco which is currently embroiled in the controversial acquisition of a struggling Spire Bank.

It is closely followed by Harambee Sacco which has over the years seen rogue managers getting involved in one scum after another, one of the managers was brutally murdered in Eastlands under highly suspicious circumstances a few years ago, the perpetrators have never been brought to book. The questionable operations at Harambee Sacco saw former members under the employment of the Kenya Police Service withdraw to form Kenya Police Sacco. The Kenya Police Sacco is also on record over alleged extortion tendencies against members by its top managers complete with illicit transactions made against them crowned by indisciplined staff who have allegedly no respect for members who go there to seek services over their savings.

There is also Stima Sacco which came under the government’s corruption microscope in which the society lost land worth more than Ksh. 500 fraudulently at the end of last year that saw Cabinet Secretary Trade, Industrialization and Cooperatives Peter Munya moving in to oust the Sacco’s Investment Board.

In an interview with The Weekly Vision, SASRA boss Peter Njuguna acknowledged the challenges in the Sacco sector saying that they are being executed by rogue managers who have infiltrated the movement worsened by cybercriminals targeting its massive cash. Mr Njuguna said: “We are acutely aware of these problems plaguing the movement and we are dealing with them ruthlessly. We are already cracking the whip and those found culpable will face the consequences and their illicitly acquired wealth recovered to the rightful owners.”

In an interview with The Weekly Vision, SASRA boss Peter Njuguna acknowledged the challenges in the Sacco sector saying that they are being executed by rogue managers who have infiltrated the movement worsened by cybercriminals targeting its massive cash

Perhaps the worst of the whole business is at the Saccos’ umbrella organisation the Kenya Union of Credit Cooperatives (KUSCCO) which has to date failed to mitigate itself against accusations of corruption and massive entrenched nepotism, from its former CEO Carilus Ademba to the current one George Ototo.

The state of affairs is bad especially since the eruption of the deadly Covid 19 pandemic and the lockdowns that followed. More than Ksh. 4 billion has not been remitted to Saccos aligned to government ministries and state corporations, according to KUSCCO CEO George Ototo.

Interestingly according to statistics from SASRA, at the end of the last financial year, most of the mentioned Saccos are not among the top ten best deposit taking Saccos in the country particularly on dividend payments and interest rates. The Saccos, Mwalimu, Harambee, Stima, Kenya Police and Afya are among the country’s top lenders after accumulating savings and assets worth more than Ksh. 155.9 billion as at the end of the last financial year. 

Ms Dolphine Aremo, the Director Cooperatives, Trade and Tourism Nairobi County, said the Saccos had accumulated vast wealth over the years and all of them have branches in virtually all counties across the country. Ms Aremo said: “The pack is led by the giant Mwalimu Sacco that had as at the end of the last financial year accumulated savings and assets worth more than Shs.46 billion, while Stima Sacco came in second, having garnered more than Ksh. 32 billion.”

The Kenya Police Sacco had more than Ksh. 28.9 billion, Harambee Sacco Ksh. 26 billion while Afya Sacco had more than Ksh. 19 billion. According to SARSA statistics, as at the end of the last financial year, Stima Sacco led with interest rates pegged at 10.70% and share capital dividend rates on accumulated deposits at 17%. It was followed by Kenya Police Sacco with interest at 10.50% and share capital dividend rates on accumulated deposits at 17%. Gusii Mwalimu Sacco based in Kisii County had an interest at 10% and share capital dividend rates on accumulated deposits at 17%. Sheria Sacco interest 8.50and share capital dividend rates on accumulated deposits at 16% and Mhasibu Sacco interest and share capital dividend rates on accumulated deposits at 17%.

The others are Nation Sacco of Nation Media Group interest 8%and share capital dividend rates on accumulated deposits at 15%, Kimisitu interest 8%and share capital dividend rates on accumulated deposits at 15%, Safaricom interest 7.50% and Finnlem Sacco interest 6.2% and share capital dividend rates on accumulated deposits at 12%. The Kenya Banker’s Sacco interest 6%and share capital dividend rates on accumulated deposits at 10% and the giant Harambee Sacco interest 6%and share capital dividend rates on accumulated deposits at 6%.

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