RUKUNGIRI, November 27, 2025 — The High Court in Rukungiri has nullified a forensic audit commissioned by Buyanja Cooperative Savings and Credit Society Limited [SACCO] after finding that the society failed to follow the procedures prescribed under the Cooperative Societies Act when hiring the external auditors who conducted the investigation.
The audit, undertaken by BMR Associates Certified Public Accountants, targeted Oscar Mwebesa, former Branch Manager of the SACCO’s Karunoni Branch, who is accused of embezzling Shs 296,700,000 between March 1, 2020 and November 30, 2023.
The SACCO had relied on the BMR audit report to initiate criminal proceedings against Mwebesa. However, under Case No. 006 of 2024, he petitioned the High Court for judicial review, arguing that the audit was illegal and improperly sanctioned because the SACCO failed to comply with the statutory process for appointing external auditors.
In a written ruling delivered on Wednesday, Resident Judge Susan Kanyenga agreed with Mwebesa. She held that BMR Associates had been “illegally and improperly constituted by the Registrar of Cooperative Societies and sanctioned by the SACCO in a manner constituting a breach of the SACCO’s by-laws,” rendering the audit report and its findings “untenable in law”.
Quashing the report, Justice Kanyenga ruled: “The forensic audit report for the period 1 March 2020 to 30 November 2023 is tainted with illegality, irrationality, unreasonableness and procedural impropriety, and is therefore null and void.”
Failure to obtain registrar’s approval
Mwebesa successfully argued that the SACCO had not secured mandatory approval from the Registrar of Cooperative Societies for BMR’s appointment at the time the audit was conducted.
The Cooperative Societies Act sets out a clear framework for appointing auditors to cooperative societies. Section 74[1] [as amended] requires every SACCO to nominate annually, at its Annual General Meeting [AGM], an external auditor from the Registrar’s pre-qualified list.
Section 75 further stipulates that no auditor may hold office without the Registrar’s formal approval.
How the SACCO erred
At its 19th AGM on March 11, 2023, Buyanja SACCO nominated BMR Associates Certified Public Accountants to serve as external auditors for the 2023/24 financial year.
However, on December 14, 2023, the SACCO instructed BMR to carry out an investigative audit of the Karunoni Branch. BMR conducted the forensic audit shortly thereafter and issued its report in January 2024.
Crucially, records show that the SACCO only submitted BMR for approval as external auditors for the 2024/25 financial year on March 12, 2024, following their nomination at the 20th AGM on 9 March 2024. The Registrar approved BMR that same month.
According to the Court, this meant that at the time the forensic audit was carried out—December 2023 to January 2024—BMR Associates had not been formally approved, and therefore lacked the legal authority to undertake the audit. Consequently, the audit was invalid.
Violation of natural justice
The Judge also agreed with Mwebesa that the audit process breached the principles of natural justice by denying him a fair hearing.
“The respondent’s actions amounted to hearing one side [management’s accusations and the auditors’ interpretation of the records],” she held, adding that such a breach invalidated the audit findings.
Nevertheless, the Court clarified that prosecutors may still pursue the matter based on any other lawful and admissible evidence.
Court declines to clear Mwebesa of fraud
Although Justice Kanyenga awarded Mwebesa costs of the application for the judicial review of the audit process, she declined to declare him free of responsibility for the alleged fraud or to bar the SACCO from attempting to recover the funds.
“This Court cannot declare that the Applicant [Mwebesa] is not responsible for any fraud or stop recovery of the funds,” she stated.
The Judge also refused to restrain the SACCO from dismissing Mwebesa, filling his position, or initiating criminal proceedings, saying that an unresolved allegation of fraud remained. His request for damages was similarly denied, as the dispute centres on loss of SACCO funds. She advised Mwebesa that he may pursue some of these remedies through a private suit if he has evidence.
Lessons for SACCOs
Experts who followed the case said the ruling underscores the importance of adherence to governance standards and statutory procedures within Uganda’s cooperative sector.
They urged SACCOs to seek regular legal guidance, rather than resorting to ad hoc legal representation after problems arise, and to follow proper procedures when hiring auditors.
“From this ruling, we learn that the SACCO hurriedly hired a private lawyer and will now have to pay costs to the applicant on top of paying the lawyers. This is a significant loss to the SACCO,” one expert noted, advising against appealing the decision since the Court based its ruling squarely on the SACCO’s procedural failures.
https://thecooperator.news/court-issues-criminal-summons-against-former-trade-ministry-ps-ssali/
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