AG payments misstep costs taxpayers Sh313m

The Housing and Urban Development ministry has been surcharged Sh313 million in accrued interest after the Attorney-General’s office delayed transferring funds it had set aside to settle legal claims by a Nairobi landowner and two contractors in Nakuru.

In one of the claims, a landowner in Nairobi's Kileleshwa area was in 2012 awarded Sh136.95 million after the ministry irregularly took over his parcel and constructed apartments on it without compensation.

The Housing ministry handed the amount to the AG in two tranches of Sh103.9m and Sh33.03million on July 10, 2019, and April 21, 2020, respectively.

The payment was final and catered for the principal and interest accrued from March 13, 2015, to December 31, 2019.

“However, review of documents indicate that the claimant issued an additional demand note of Sh24,212,628 to the State Department as an additional interest accrued for six months due to failure by the Attorney-General to transmit the awarded amount on time,” Auditor General Nancy Gathungu said.

Nakuru contractors

The second case involved an arbitral award to two Nakuru contractors of Sh402.4 million. Although the ministry released the amount to the AG’s office, an additional Sh288.8 million was still accrued on delays.

The arbitral award was for two contractors under a contract known as Nakuru Town Roads Project valued at Sh100.72m and Sh301.76m outstanding since October 31, 2017, and June 3, 2018, respectively.

“Although the State Department had paid Sh305,999,999 as at June 30, 2021, the two arbitral awards had accumulated additional compound interest of Sh283,504,982 and an additional cost of Sh5,390,215 both totalling Sh288,295,197,” Ms Gathungu said.

“The additional value of Sh288,295,197 represents an avoidable expenditure for which no value of money was obtained” she added.

The laxity at the AG’s office indicate the challenges behind settling the mounting legal bill that has hit Sh1.2 trillion for torture victims, constitutional violations, contract breaches, and unlawful dismissals.

The value of legal suits is so big equivalent to 71 percent of the country’s annual taxes or Kenya’s total debt to the World Bank.