Fraud allegations rock Bugisu Cooperative Union, six employees arrested

Six employees of Bugisu Cooperative Union (BCU) are under investigation over alleged fraud involving coffee beans belonging to the union worth about Shs 752m.

The implicated officers, including Andrew Nabudere (Plant Engineer), Lydia Kwaga (Tally Clerk), Jesica Nabuzale (Tally Clerk), Stephen Namoso(Machine Operator), Betty Nadudu (Stores Manager) and William Isaiah Wabulo (Operation Manager) were arrested by the police under case No. MBL CRB 877/2020 for alleged theft of BCU’s coffee beans worth Shs 752,600,000

Elgon regional police spokesperson, Rogers Taitika, confirmed the arrest of the union staff for their alleged involvement in fraudulently stealing coffee beans over a period of one year.

“Investigations have commenced into the alleged fraud by the said officers. This comes after the top management officials raised a red flag demanding for their arrest because of their dubious dealings,” Taitika said.

The six officers were two weeks ago arrested and detained at Mbale Central police station, but later released on police bond as investigations are ongoing. They are being charged with theft of coffee beans as per audit report

Sophisticated syndicate

Preliminary investigations indicate that the officers in question have long been inflating the number of farmers who have supplied the union with coffee beans on credit, and as such, the figures declared do not tally with the volume of coffee in the union’s silos.

Bugisu Cooperative Union Vice Chairman, John Musila, told theCooperator that the implicated officers had developed a sophisticated syndicate to defraud the union of its profits.

He explained that whereas the officers had indicated that they had received coffee beans worth Shs 3.6bn from farmers on credit worth, the actual amount of coffee in storage turned out to be much less.

“Top management took a decision to weigh all the coffee beans in the factory silos, only to realize that it was less. The Union records revealed that genuine farmers would be paid about Shs 2.4bn only [instead of Shs 3.6bn as indicated in the records]. It was then discovered that the said officers had inflated the list of creditors with ghost farmers. This implies that the profit margin of Shs 1.2bn was not declared. This tantamount to defrauding the union,” Musila said.

Musila further explained that the Shs 1.2bn would be somebody’s margin, accrued from creating ghost creditors.

“These people had even gone to the extent of creating their non-existent societies which they claimed had supplied coffee and yet had supplied air,“ he said.

The BCU vice Chairman says that management has for sometime suspected foul play within union’s internal processes.

“The management has been all along following up these dubious dealings until a time when they [senior management] instituted an internal audit which showed a lot of mess in the procurement of coffee beans. We had to invite the police to continue with more investigations,” he said.

Musila also indicated that the audit’s preliminary findings showed that the said officers would buy coffee beans at Shs 7.000 per kilo but later sell that same coffee, milled, to their own dealers at Shs 11,000 a kilo, making a difference of Shs 4.000, which they didn’t reflect in the union’s books.

“These people have been making huge profits on each kilo of coffee leaving the union with less profit,” Musila explained, adding that the offending officials had been sent on forced leave as investigations are ongoing.

David Mafabi, the BCU spokesperson, confirmed that police is carrying out investigations over the alleged defrauding of the Union’s funds.

“There was total disregard by these officers to declare coffee beans in the silos,“ he said.

He explained that BCU has a total of 32 silos, all of which currently are full to capacity, but because of the ongoing investigations, management resolved that all the coffee beans stored in the factory silos be re-weighed to ascertain its actual quantity, which is what revealed the mess.

“This union has been registering big losses or only minimal profits due to rotten acts by some of these individuals. This was a well-calculated move and syndicate by these officers, and has been going on for a while,” Mafabi said.

Bugisu cooperative Union [BCU], historically one of the outstanding unions in the country, has been rocked by several controversies in the recent past.

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