George Magutu, once a respected figure in Kenya’s cooperative sector, has seen his reputation crumble under the weight of a massive financial scandal involving the Kenya Union of Savings and Credit Cooperatives (KUSCCO).
As the former chairman of KUSCCO and current treasurer of New Fortis Sacco, Magutu is now at the center of a multi-billion-shilling fraud that has left the cooperative body insolvent and thousands of members’ savings at risk. The scandal, uncovered through a forensic audit by PricewaterhouseCoopers (PwC), reveals a web of deceit, mismanagement, and outright theft that has shocked the nation.
The audit exposed how Magutu, alongside other top officials, orchestrated a scheme to siphon off KSh 13.3 billion from KUSCCO.
This was achieved through a series of fraudulent activities, including the falsification of financial statements, misappropriation of funds, and unauthorized commissions.
One of the most shocking revelations was the use of a deceased auditor’s signature to approve falsified accounts. Alfred Basweti, an auditor from Omenye and Associates, had passed away before the 2022 financial statements were signed, yet his signature mysteriously appeared on the documents.
This blatant forgery highlighted the extent of the corruption within KUSCCO’s leadership.Magutu’s role in the scandal extended beyond mere oversight.
He was directly implicated in the manipulation of financial records to create phantom profits, concealing massive debts and misstating accounts by KSh 9.3 billion.
The audit also revealed that KSh 6.5 billion in interdepartmental loans were hidden from the books, with only a fraction ever recovered.
This financial mismanagement left KUSCCO with a deficit of KSh 12.5 billion, putting KSh 24.8 billion in deposits from 247 SACCOs at risk.
The theft was not limited to cooked books. Magutu and his associates allegedly withdrew KSh 1.6 billion in commissions, with KSh 500 million unaccounted for.
They also overpaid insurance brokers, including Baobab Insurance Agency, which received KSh 821 million in suspicious transactions. Additionally, KSh 206 million was stolen through unexplained cash withdrawals, purportedly for replenishing funds at KUSCCO branches.
The main cashier, Francis Wande, admitted to handing over KSh 135 million in cash to Magutu and others over seven years, with no records of how the money was used.
Magutu’s involvement in the scandal has not only tarnished his reputation but also raised serious concerns about the safety of funds at New Fortis Sacco, where he currently serves as treasurer.
Members of the Sacco have expressed fears that similar mismanagement could be occurring under his watch. The government has warned that recovering the lost billions will be a long and difficult process, leaving many SACCO members to brace for potential financial losses.
The fallout from the KUSCCO scandal has been devastating. Magutu, along with three other suspects, was arrested on February 13, 2025, and faces multiple charges, including conspiracy to defraud, theft by company directors, and making false documents.
His arrest marks a significant step in holding those responsible accountable, but the damage to his reputation and the trust of cooperative members may be irreparable.
Once a beacon of trust in the cooperative movement, George Magutu’s name is now synonymous with fraud and betrayal, a stark reminder of the dangers of unchecked power and greed.
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