Exclusive: How Kuscco MD George Ototo flouted sacco law in unlicensed deposit-taking scandal
The managing director of the Kenya Union of Savings and Credit Cooperative Society (Kuscco) George Ototo was yesterday ordered to leave the Sacco Congress in Botswana and immediately return to Kenya to resolve the serious audit issue pending in his office.
The directive came from the Co-operatives and Micro, Small Medium Enterprises Cabinet Secretary (CS) Simon Chelugui, who attended the conference along with the Principal Secretary (PS) Patrick Kilemi.
Mr Ototo was told to leave the country in the next available flight and report to the Sacco Societies Regulatory Authority (Sasra) for questioning.
Kuscco, which is the umbrella organization for SACCOs in the country, is under investigation for allegedly engaging in illegal deposit-taking business in breach of the law.
According to Mr Chelugui, Kuscco appears to be carrying out regulated sacco business without being licensed or authorized to do so as required by the provisions of Sacco Societies Act No.14 of 2008 and the Regulations made thereunder.
He said he had directed Sasra to conduct an inspection or cause to be conducted an inspection of Kuscco and its books, accounts and records to determine the extent of the violation and recommend appropriate actions that may include sanctions on Kuscco and its directors.
He also noted that the inspection would aim to bring Kuscco under the regulation of the Sacco Societies Act for purposes of compliance as well as for the protection of the public interest.
A review of the Kuscco by-laws revealed provisions involvement in deposit-taking although it is fashioned as an outfit that lobbies for the growth and development of saccos in the country.
The by-laws state that the board of directors of Kuscco has the power to fix rates of interest to be charged on loans and balances made to member societies and to determine the rate of interest that shall be paid on deposits.
Disclosures by Sasra show that overall, total savings for the Sasra-regulated Saccos grew by 9.84 per cent to Sh620.45 billion at the end of last year compared to Sh564.89 billion in the preceding year.