KUSCCO Housing under Sh1.7billion suspected fraud
The officials of the troubled KUSCCO Housing Co-operative Society Limited are on the spotlight after the government ordered a formal probe following complaints that it was used to siphon up to Sh1.7billion of members’ savings from affiliated SACCOs.
Through a gazette notice dated October 28, 2025 (No. 17555), Commissioner for Co-operative Development David K. Obonyo under the Co-operative Societies Act (Cap. 490) has directs investigators to scrutinise the society’s by-laws, financial records, and the conduct of both current and former officials.
The investigation stems from a petition by members alleging mismanagement and significant financial losses.
KUSCCO Managing Director (MD) Arnold Munene asked the regulator to halt KHC’s AGM, investigate KUSCCO Housing Chief Executive Officer Julius Odera, and audit the books after KHC directors challenged KUSCCO’s stake and moved to rebrand and exit KUSCCO premises.
A dispute over Kuscco’s 70 per cent claim in Kuscco Housing Co-operative Society (KHC) has prompted the Commissioner for Co-operative Development to order a fresh review of KHC’s ownership and finances, following warnings of a Sh1.69bn exposure.
The row unfolds against findings from a PwC forensic audit into KUSCCO’s wider Sh13.3billion loss, which flagged irregular lending concentrated in KHC and the former Kuscco Housing Fund (KHF).
PwC cited 240 loans worth Sh1.11billion issued above the five-times savings cap, diversion of rental income, and procurement anomalies.
The report links Odera to conflicts of interest and borrowing far beyond limits, including a Sh10million loan against Sh940,700 savings and a Sh4.5million top-up against Sh228,000.
Investigations by the commissioner’s office concluded end of last month, with formal findings pending.
Kuscco says it has been KHC’s “primary financier and operational backbone,” transferring Sh416million in member savings from KHF as 80 per cent of members migrated in 2019, and warns assets could be at risk if KHC breaks away.
Outcomes now hinge on the regulator’s determinations, potential legal action, and safeguards to protect sacco member funds and restore governance.
The inquiry team comprising of Fondo Nzovu, Assistant Commissioner for Co-operative Development, and John Kariuki Kinyanjui, Senior Co-operative Auditor has been authorised to commence investigations within 15 days.
They are expected to summon relevant parties as needed and conduct the probe at locations they deem appropriate.
The notice cites sections 58 and 73 of the Act as the legal basis for the investigation, while also outlining provisions on inquiry costs, surcharges, and potential offences under sections 60(1), 60(2), 94 and 73. Members and officers of the society have been directed to fully cooperate.
The inquiry team is expected to submit its findings and recommend possible action, including surcharges or prosecution where wrongdoing is established.
