NAIROBI, Kenya, Sept. 8 – The High Court has temporarily stopped the liquidation of the Kenya Union of Savings and Credit Co-operative Union Limited (KUSCCO), blocking liquidators appointed through a Gazette Notice from taking further action.
In a ruling, Lady Justice Rhoda Rutto said the appointed liquidators could not rely on the same act that purported to appoint them to exercise their powers.
The case was filed by RUPSA NWDT Sacco Society Limited, which challenged the liquidation of KUSCCO after losing Sh108.8 million following the union’s collapse.
Last week, Justice Rutto certified the matter as urgent and directed that the parties proceed with the case.
The case followed a Gazette Notice issued by the Commissioner for Co-operative Development, David K. Obonyo, ordering the liquidation of KUSCCO amid losses attributed to internal mismanagement and financial challenges.
The liquidation followed a meeting of KUSCCO members at which the umbrella body’s members approved the move amid concerns over its liquidity position.
Liquidation involves taking control of a company’s assets to settle debts owed to creditors and can eventually lead to the closure of the entity.
A forensic investigation conducted by PwC about two years ago found a financial shortfall of between Sh12 billion and Sh13.3 billion at KUSCCO.
The investigation linked the losses to alleged ghost loans, falsified commissions and executive mismanagement.
The financial losses forced several SACCOs to write off millions of shillings invested in KUSCCO.
Others that lost millions included Stima DT SACCO, which was forced to write off Sh108 million, Balozi SACCO (Sh437.5 million) and Afa SACCO (Sh361.6 million), among others.
