Petitioners accuse Kenya Bankers SACCO of systemic fraud and mismanagement

Two petitioners have moved to the High Court of Kenya, Milimani, seeking to expose a decade of systemic fraud, insider abuse, and regulatory failure at Kenya Bankers SACCO Society Ltd.

Speaking in Nairobi, petitioners Davies Mbaabu Kajogu and Joakim Simiyu said they have filed a Constitutional Petition demanding justice, transparency, and member protection.

They claim over Kshs. 2.9 billion in member equity has been eroded through fraudulent interest income, under-provisioned loans, and concealed liabilities.

“The SACCO’s leadership has betrayed members’ trust and violated constitutional rights. This is not just mismanagement; it is a coordinated assault on the financial dignity of hardworking Kenyans,” said Kajogu.

According to the petition, a Kshs. 200 million loan from KUSCCO was irregularly taken in 2013 and concealed for ten years before being quietly passed onto members in 2023. It further alleges that a Kshs. 600 million guarantee was never disclosed in audited accounts, exposing members to contingent liabilities.

The Shaba Housing Project, initially approved at Kshs. 300 million, allegedly consumed Kshs. 722 million, resulting in Kshs. 389 million in impairments. Governance expenses of Kshs. 40 million were also charged against member income, while Kshs. 10 million from a land sale in Syokimau remains unaccounted for.

Kajogu said more than Kshs. 100 million was spent on ICT and branding through single-sourced tenders, violating procurement laws. He claimed that Packline Systems Ltd was overpaid by Kshs. 1.5 million, with no refund or accountability.

“The contracts were awarded without competitive bidding and some vendors were linked to individuals who also received high-value, non-performing loans,” Simiyu added.

The petitioners accuse the SACCO’s board of manipulating governance structures to suppress member oversight by replacing full-member Annual General Meetings with a Delegates’ system. They said the transition was coercive and unconstitutional.

“The bylaw amendments imposed discriminatory financial thresholds that effectively exclude youth and low-income members from leadership,” they stated.

They allege that nepotism and favoritism have influenced appointments and promotions within the SACCO, with board members hiring relatives and close associates in violation of the Employment Act and Article 73 of the Constitution.

In addition, the petition challenges the appointment of Mr. Lucas Ondong Otieno as Chief Executive Officer in 2022, saying he was a former board member and Honorary Secretary when the concealed KUSCCO loan was taken. His appointment, they claim, lacked a competitive process or formal board resolution.

They also accuse regulators — SASRA and KUSCCO Ltd — of failing to act despite multiple red flags, and allege that external auditors Kreston KM & Company LLP were complicit in concealing material liabilities.

The petitioners are demanding the immediate suspension of the SACCO Board and CEO, a forensic audit from 2013 to 2025, public disclosure of all inspection and audit reports, criminal prosecution of culpable officials, and compensatory damages of Kshs. 5 billion for collective member loss.

They also seek the reinstatement of unlawfully removed delegates and a permanent injunction against governance manipulation.

“This SACCO was built by the sweat and sacrifice of ordinary Kenyans. It must not be destroyed by greed, silence, and impunity,” Kajogu said.

The case is expected to spark renewed debate on governance and accountability within Kenya’s cooperative movement.