A report from SASRA investigative unit (Sacco Societies Fraud Investigations Unit) has revealed that the Sacco sub-sector suffered an enormous loss of Ksh118.1 million in the last two years due to fraud.
An additional Ksh114.4 million is suspected to have been lost in the same period.
The investigative unit revealed that the fraudsters have been using the weak internal controls and mobile money services such as M-Pesa to carry out theft.
SASRA said the cases show that the main perpetrators of the fraudulent activities are internal Sacco officials who are expected to exercise integrity even as the sector is waiting for the implementation of an insurance scheme to protect depositors from such losses.
“The internal technical staffs working within Saccos’ ICT and credit departments are the greatest collaborators in the perpetuation of fraudulent activities, hence Saccos are called upon to constantly review the adequacy of the internal controls in their ICT and credit functions,” SASRA said in a report.
The report further revealed that in June last year, there was an illegal withdrawal of Ksh29.4 million from certain members’ savings accounts using unregistered mobile phone numbers. The money was then transferred to M-Pesa accounts.
“An unknown person acting on behalf of a Sacco fraudulently opened an account at a branch of a commercial bank in the name of the complainant, and then borrowed Ksh1.16 million from the Sacco, which was deposited into that account,” SASRA noted.
In one of the largest thefts, members of the public in January 2021 reported to SASRA investigators that they had lost Ksh63 million to a certain unlicensed entity operating as a Sacco.
SASRA says the investigating unit was told the unnamed entity mobilised millions of shillings from the public with promises of returns but folded abruptly. The case remains pending.
In February last year, fraudsters used dead members’ accounts and credentials to tap loans worth Ksh24,784, leaving another Ksh486,879 exposed to theft.
SASRA’s investigative unit also received reports that certain officials of a Sacco had fraudulently used the entity’s funds to purchase land, exposing members to a Ksh55 million loss.
However, SASRA did not disclose the names of the Saccos hit by the fraud.
By Vostine Ratemo
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