Nairobi — The Senate Standing Committee on Trade, Industrialization and Tourism has intensified its inquiry into the Kenya Union of Savings and Credit Cooperatives (KUSCCO), questioning Cooperative Development Commissioner David Obonyo over governance failures, regulatory oversight and financial accountability at the union.

Lawmakers questioned how major financial irregularities went undetected despite the Commissioner's office being represented on KUSCCO's board.

Senator Jackson Mandago sought an explanation on the oversight role after the union's governance and financial management failures emerged.

Obonyo told the committee that although KUSCCO had been holding annual general meetings, conducting elections and submitting audited financial statements, complaints from members who were unable to access their investments prompted the deployment of an inspection team in 2023.

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The inspection found that KUSCCO's loan book had been overstated by more than Sh7.6 billion, leading to forensic investigations by Grant Thornton LLP and PricewaterhouseCoopers LLP.

The committee also questioned the regulator's audit oversight, with Busia Senator Okiya Omtatah arguing that the Commissioner should have gone beyond relying on audited accounts.

Obonyo said the financial statements appeared balanced but did not reflect the union's true financial position, adding that oversight has since been strengthened beyond routine compliance reviews.

Lawmakers further examined the appointment of KUSCCO's statutory auditors and broader challenges affecting regulation of the cooperative sector, including inadequate funding for inspections, staff shortages and weak ICT infrastructure.

They also requested a list of other SACCOs audited by Omenye & Associates CPA(K), the firm that audited KUSCCO between 2020 and 2022.