Sh5,000 deposit for Sh10.5m house: The rot in Kuscco Kajiado project

The audit into the Kenya Union of Savings and Credit Co-operatives Ltd (Kuscco) details how the entity sold houses with no evidence of deposits, putting the giant union into huge losses. One transaction revealed that only Sh5,000 was wired into the account.

The 208-page document that has informed recent arrests and arraignments of former officials details fictitious sales commission payments and how one buyer bought four houses but only paid a deposit for one.

The houses, 120 in number, are under the Kuscco Homes Project located in Kitengela, Kajiado County.

Apart from the 120 houses, the project also houses a commercial centre that has a barbershop, salon, restaurant, mini-mart, gym and swimming pool.

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By the end of 2023, there were 52 homes rented out and 24 vacant.

The minimart and gym were unoccupied. The barbershop and salon had been sold for Sh4.5 million and Sh7 million respectively.

The audit report reveals that from the houses sold in cash and under TPS, there was no evidence of complete payments.

Additionally, houses were being issued on TPS without evidence of deposits with some TPS loans being marked complete with no evidence of payments recorded.

An example is four units sold to Dolphine Buoga through TPS. The report shows that for her first purchase, there is a trace of Sh400,000 made to Kuscco Housing Fund (KHF), one-half of the fund used to build the houses. This transaction was made on December 9, 2019.

“Deposits for her other TPS loans remain untraceable,” the report says. This is notwithstanding that the Sh400,000 is not a full deposit as per the TPS agreement.

The other is the case of Thomas Chira, who also got a house through TPS at a quoted price of Sh10.5 million.

“From the bank statements, we can only trace a transaction of Sh5,000 deposited to the KHF Coop account,” the report states.

There is also the case of Cyrus Kabira Njine, who was awarded a discount of Sh1 million in questionable ways.

He ended up paying Sh9.5 million for the Sh10.5 million house.

The report states that on April 18, 2018, Kuscco informed Mr Njine that he had been awarded a discount of Sh1 million reducing the amount payable to Sh9.5 million.

“On June 18, 2018, two cheques, each valued at Sh500,000 were issued to Mr Njine, and KHF account was debited accordingly. It is not clear how the discount was arrived at and why,” the report says.

The report quotes the new Kuscco Housing Cooperative (KHC) chief executive Julius Odera, who was then KHF Manager, saying the particular property was sold by former Kuscco chief executive George Ototo, who is facing charges in court.

The report further lists TPS loans that have been marked as paid off with no evidence of complete payments.

This involves a case of former Kuscco director Alfred Mwadime Mlolwa who was granted a TPS loan as a staff at a rate of Sh7.8 million.

“His loan statement (member number 15327) records a payment of Sh7.36 million, marked as lumpsum payment clearing the TPS loan. However, this amount is not traceable in the bank statements,” the audit report says.

According to Mr Odera, the then KHF manager, Mr Mlolwa deposited Sh8 million by Qwetu Sacco on July 26, 2021, to be allocated to clear his TPS loan with the balance to go to his savings.

“The authenticity of this communication remains unverified,” the report says.

“A notification for the transfer of title was issued to the lawyer, Jackline Omolo on June 6, 2023, for his property.”

There is also the case of Sylvia Obango, whose file shows a transaction of Sh700,000 on September 28, 2022, for a TPS loan of Sh10.5 million.

This payment is made by Billy Obango, her relative, who is a cash buyer of four houses, a barbershop and a salon in the Kitengela project.

The report shows that the same Sh700,000 is also made in Mr Obango’s file as part of the payment of the properties. Ms Obango’s loan is marked as paid up in the KHF portfolio register.

“However, her member statement shows a running loan balance of Sh9.48 million as of July 31, 2024. Except for the Sh700,000 paid in by her relative Mr Obango, there is no evidence that Ms Obango had made any other payments,” the report says.

Even for the 52 houses that are rented out, the audit found a deficit of Sh12.97 million in collections.

Bank statements

The report states that the records of rental income collection were inadequately maintained.

The process of reconciling rental income and bank statements was initiated in July 2024, according to a clerical officer at KHC, Bartholomew Angwenyi.

“Furthermore, for 32 out of the 52 houses recorded as rented, we have no way of establishing date of occupancy. There is no evidence of any tenancy agreements that were signed,” the report says.

The audit team samples 20 occupants whose occupancy dates were recorded in the rent collection schedule shared by Mr Angwenyi and prorated to determine the expected rental payments as of December 2023.

This was compared to the actual payments received.

“This analysis revealed a deficit in the collected rental income amounting to sh12.97 million,” the report says.

Mr Angelis Okelele, the current caretaker of Kuscco Homes in Kitengela informed the audit team of the difficulties in reconciling rental income as some clients claimed to have made rental payments that were not reflected in Kuscco bank statements.

The report lists houses number 103 and 17 whose payments could not be traced. Of the breakdown issued by Mr Okelele, 16 of the 52 houses on rent have been defaulting on payments since he took office in August 2024.

The reporter says KHF Marketer Redempter Akinyi, was responsible for reconciliation.

Financial tracking searches showed that a former caretaker, Kennedy Ochieng, shared income reports with Mr Odera.

It is reported that Mr Ochieng, who according to Mr Angwenyi is a cousin of Mr Odera, was dismissed from his caretaker position due to mismanagement of rental income.

“However, Mr Odera stated that the dismissal was due to persistent absenteeism. Mr Odera claimed to have communicated this issue to the human resources department but no documentation of such communication has been provided,” the report says.