Senior officials among 9 arrested in Ksh160M Sacco fraud

Detectives from the Directorate of Criminal Investigations (DCI) have arrested nine employees of Njiwa Savings and Credit Co-operative (Sacco) Society in connection with the disappearance of Ksh160 million from Sacco savings.

In a statement through its official twitter handle this morning September 23, 2023, the DCI noted that the employees belonging to staff of the National Intelligence Service (NIS) were arrested following a comprehensive joint investigations conducted by both the DCI detectives and officials from the intelligence agency.

“Detectives have arrested 9 employees of a savings and credit Sacco Society in relation to the disappearance of approximately Ksh160 Million. The employees of Njiwa Sacco, belonging to staff of the National Intelligence Service (NIS), were rounded up following comprehensive joint investigations, conducted by detectives and officials from the spy agency,” said the DCI in a statement.

“The nine (9) include senior Sacco officials Amos Kipchumba who was the internal auditor, the loans Manager Violet Wali, the accountant Caren Langat and system analysts Hamisi Zaunga and Miriam Nthenya. Others are a teller identified as Nicodemus Osiemo, Eric Rono from Sure-step Systems, Moses Ntoinya, an NIS Officer, and Tony Wabomba, a former employee of the Sacco,” added the DCI.

According to the DCI, the 9 have since been dismissed from the Sacco and face 9 counts of conspiracy to commit a felony, stealing by servant, false accounting by servant, negligence, computer fraud, forgery, uttering a false document, access with intent to commit an offence among other charges; and they will be arraigned in court on Monday, September 25, 2023.

“Detectives are on the trail of three other suspects who have since gone into hiding. The agencies involved in the investigation of this high level fraud shall continue to investigate and expose corrupt individuals and networks, while taking concrete steps to ensure transparency and accountability in the management of public entities,” stated the DCI.

A recently released Sacco Supervision Annual Report, 2022 by the Sacco Society Regulatory Authority (SASRA) disclosed that rogue Sacco staff are riding on mobile money services such as M-Pesa to carry out fraud.

The Authority’s investigative unit, Sacco Societies Fraud Investigations Unit (SSFIU),  revealed that between 2021/2022, it dealt with fraud cases amounting to Ksh233 million, with Ksh118.1 million actually getting stolen while Ksh114.8 million being at risk of getting lost.

October last year witnessed a brazen case where someone walked into a commercial bank, opened an account in the name of a Sacco and tapped loans worth Ksh1.16 million.

“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, then borrowed money from the Sacco which was deposited into that account,” says SASRA.

On October 3, 2022, another Sacco lost Ksh1.60 Million after an internal staff linked members’ savings accounts to un-authorised mobile number and withdrew Ksh1.6 million. The suspect was arraigned in court and convicted.

In September 2022, another Sacco was at risk of losing Ksh4.20 Million to former officials who awarded themselves loans without following the credit policies. The File was closed with recommendations for civil recovery and administrative supervisory actions.

Another allegation that was reported to the investigative unit was on July 2, 2022 which was of embezzlement of SACCOs funds by channelling the same to a subsidiary between 2015 and 2020, with total amount being exposed to risk being Kshs 55.20 Million. The case is pending under investigations.

Also, on June 7, 2022 it is alleged in the report that there was illegal withdrawal of Ksh29.40 Million from certain members’ savings accounts using unregistered mobile phone numbers and then transferred to M-PESA accounts.

In February the same year, fraudsters used dead members’ accounts and credentials to tap loans worth Ksh24,784, leaving another Ksh486,879 exposed to theft.

A total of Ksh55 Million is also at risk since it was reported to the investigative unit on February 16, 2022 that there was fraudulent usage of SACCOs funds by certain officials to purchase land, with the Inquiry File submitted to the Director of Public Prosecutions for advice.

In a single weekend in December 2021, four Saccos were hit by fraudulent transactions totalling Ksh22.2 million. The amount was withdrawn from the Saccos’ float and paybill numbers, transferred to other M-Pesa accounts and then withdrawn, leaving the Saccos counting losses.

In April 2021, an unnamed Sacco officer diverted to their account Ksh642,000 meant for M-Pesa floats as well as commissions paid for undertaking M-Pesa business.

In January the same year, members of the public reported to SASRA investigators that they had lost Ksh63 million to a certain unlicensed entity operating as a Sacco.

“The trend analysis of the cases reported in 2022 as well as those reported in 2021 shows that the main perpetrators of the fraudulent activities are internal SACCO officials. There was only one incidence of a cyber-attack and breach related fraud reported in the year 2022 but which was also perpetrated in collusion with inside staff. The internal technical staff working within SACCOs’,” reads SASRA report.

“ICT and credit departments have been noted to be the greatest collaborators in perpetuation of fraudulent activities, and thus SACCOs are called upon the constantly review the adequacy of the internal controls in their ICT and credit functions,” adds the report.

By Roy Hezron

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