A tribunal has ordered the troubled Kenya Union of Savings and Credit Co-operatives (Kuscco) to refund a matured Sh489 million investment by Mhasibu Sacco Society Limited, piling pressure on the umbrella organisation facing widespread debt claims.
The Co-operative Tribunal said that Kussco is obligated to honour its investment contract with Mhasibu Sacco despite its financial challenges.
“The claim, as it were, stands uncontroverted. It is unfortunate the Respondent is experiencing financial challenges. However, a contract signed between the Claimant and Respondent still stands and where there is breach of a contract the “innocent” party, as it were, rightly pursues legal remedies,” the Tribunal ruled.
The order followed an application by Mhasibu Sacco, seeking the release of funds it had deposited in a fixed account at Kuscco.
In its application dated September 10, 2024, Mhasibu Sacco said that it has been a long-standing member of Kuscco and that on July 17, 2023, it invested Sh450,142,943 with the umbrella body in a fixed deposit account. It said the amount was deposited at an interest rate of 13.5 percent per annum with a maturity date of January 16, 2024.
The amount that was to be paid at maturity was Sh480,527,592 inclusive of interest. Mhasibu further said that they had a savings account with Kuscco known as “Jungu Kuu”, which had a balance of Sh11,205,566.
Mhasibu Sacco told the tribunal that it wrote separate letters to Kuscco requesting to withdraw funds from the fixed deposit account as well as the balance amount in the Jungu Kuu savings. It claimed that Kuscco failed to remit the funds, triggering a standoff.
Correspondence filed with the Tribunal showed that Kuscco, on January 31, 2024, sent communication to Mhasibu Sacco acknowledging the debt and stated that it was having financial challenges. Mhasibu Sacco rejected the assertions by Kuscco, saying it breached contract and fiduciary duty.
The Tribunal sided with Mhasibu Sacco and pointed out that Kuscco bore the responsibility of paying back the cash it received from the depositor.
“The Respondent's (Kuscco) acceptance of the funds from the Claimant (Mhasibu Sacco) to invest and acknowledgement of the same by the conduct and later trying to have them reinvest the funds suggest that both parties had a formal arrangement as a binding contract from the Claimant's documents as filed. A binding contract exists between the parties,” the Tribunal said in a July 30, 2026 decision.
“The Respondent owes the Claimant Sh.489,507,330.27 and from the evidence, the same is due. It is well-known principles that a contract cannot rewrite contracts. Parties are bound by the terms unless otherwise proven by elements like coercion, fraud or under influence, which is not the case in the present case,” it added.
Kuscco, which sits at the apex of a movement controlling trillions of shillings in member savings, is still reeling from a Sh13.3 billion financial scandal linked to some of its former officials.
Top former Kuscco officials, including the then Managing Director, George Ototo, have been taken to court over the cash scandal. Others who were charged include former chairman George Magutu Mwangi, ex-finance manager George Ochola Owino, Jackline Pauline Atieno Omolo, who was offering legal services, and Mercy Njeru, who led the controversial radio project.
Kuscco has, since last year, stepped up recoveries and compensation to saccos affected by scandals. It targets to recover at least 70 percent or Sh6.2billion of the Sh8.8 billion principal amount that Saccos had invested in it and has been relying on the sale of non-core assets, auctions, and loan recoveries to process the planned refunds.
