The Commissioner of Co-operatives removed the entire board of Stima Investment Co-operative Sacco in February 2019 following a Deloitte forensic audit exposing fraudulent land acquisitions across Kenya. The investigation revealed reckless purchases of occupied plots without due diligence, unauthorized use of member funds, and liabilities exceeding Sh500 billion.
The seven-member board, elected November 28, 2018, challenged the dismissal in court, arguing the commissioner lacked legal authority. Their application cited violations of cooperative governance laws, including misappropriation of Sh100 million from the KenGen Foundation. Instead of investing the funds as agreed, the co-op distributed dividends illegally, creating a Sh150 million liability with accumulating interest.
Key fraudulent transactions included a 2016 purchase of 15 acres in Riat, Kisumu, where officials paid a Sh9.6 million deposit for a plot later found to be occupied by 12 families. Another deal involved 140 plots in Green Isinya, where the co-op defaulted on payments after covering only 10% of the total cost. Gulf Bank, which holds the land, refuses to accept fewer than 70 plots, forcing the co-op to seek additional member investments.
The co-op also faces legal risks from a Sh15 million deposit paid to the Catholic Church for a Naivasha land deal that was never fulfilled. Disputes over Lamu properties and premature collection of funds for the Rangau project further compound the crisis. Despite promises to rectify financial statements, the organization's 2017 reports showed a 38% increase in share capital to Sh1.3 billion, raising questions about transparency.
