Audit exposes counties' illegal bank accounts

Controller of Budget Margaret Nyakang'o has warned taxpayers could be losing millions through hundreds of illegal bank accounts operated by the 47 county governments.

Between June 2023 and January 2024, counties opened over 600 new accounts, raising concerns about their purpose according to an audit by Dr Nyakang’o.

The latest report reveals that counties operated a total of 2,000 bank accounts in commercial banks during the first nine months of the 2023/2024 financial year.

This proliferation of accounts complicates the Controller of Budget's ability to track public expenditure.

The law requires county government bank accounts to be opened and maintained at the Central Bank of Kenya (CBK) for easy tracking, with exemptions only for imprest, petty cash, and revenue collection accounts.

“The growing number of bank accounts operated by counties in commercial banks has made it more difficult for the office of the Controller of Budget to track public expenditure," reads part of the report.

Private dealings

"County Executive Committee Members should be responsible and follow up and ensure compliance with the law by maintaining bank accounts at the Central Bank of Kenya for accountable spending," notes Dr Nyakang'o in the report.

Concerns have arisen that some accounts are used for private dealings, exposing taxpayers to significant losses. Bungoma County leads with 352 commercial bank accounts, followed by Baringo with 304, Migori with 208, and Nyandarua with 86.

In Bungoma County, the administration led by Governor Ken Lusaka uses 352 commercial bank accounts for operations contrary to Regulations 82(1)(b) of the Public Finance Management (County Governments) Regulations, 2015.

The county, in its records submitted to the CoB shows the accounts are designated for vocational training centres (152), health facilities and dispensaries (146), local revenue accounts (4), level 4 and 5 hospitals (21), and fund accounts (29).

Migori County operates 208 commercial bank accounts, primarily for county health facilities, dispensaries, and various departments.

Siaya County has more than 10 commercial bank accounts for activities including the Siaya County Assembly Imprest Account, the Siaya County Assembly Service Board Mortgage Car Loan (for MCAs and staff), and the Siaya County Bursary Fund, among others.

Meru County operates 26 commercial bank accounts for various purposes such as the County Assembly Members Fund Account, County Assembly Staff Car Loan and Mortgage Fund Account, Retention Account, and Meru Hospital Revenue Account.

Other counties with numerous commercial bank accounts include Nyandarua (86), Kwale (63), Kiambu (52), Embu (37), Taita Taveta (37), Murang'a (36), Tana River (34), Machakos (31), Narok (27), Kajiado (27), Kericho (25), West Pokot (24), Nyamira (22), and Uasin Gishu (20).

The devolved units are under the law required to open and maintain bank accounts at the Central Bank of Kenya (CBK) for ease of accountability, with exemptions only for imprest accounts for petty cash and revenue collection.

Prone to abuse

The number of suspicious accounts being run by the 47 counties could be higher as Nairobi, Mombasa, and Busia did not disclose the number of accounts they are operating.

The CoB has on many occasions flagged the use of such accounts on grounds that they are prone to abuse and, without proper checks, can be used to drive underhand deals using taxpayers' money.

The CoB has been pushing for real-time access to county accounts to curb misuse, but these efforts have faced challenges.

The lack of transparency and the high number of suspicious accounts highlight the need for stricter oversight and compliance with financial regulations to protect taxpayers' money.

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