Automated revenue management new conduit for stealing funds, says EACC
Ethics and Anti-Corruption Commission spokesman Eric Ngumbi addresses journalists at the agency’s head office in Nairobi early last month.
The Ethics and Anti-Corruption Commission EACC wants digitised revenue collection systems in the counties audited to guarantee their security and accountability.
This follows new revelations of fraudulent schemes perpetrated by governors and senior county officials, where contracts to procure the systems are designed to loot public funds through irregular tender awards and creation of loopholes within the system.
According to EACC spokesman Eric Ngumbi, investigations have revealed that corruption begins with fraudulent procurement processes in which the winner is predetermined.
“During the tender evaluation process, competent and renowned Information Technology providers are knocked out on flimsy grounds, while briefcase companies with no or little expertise secure the contracts at huge costs and rates of revenue sharing difference,” he said.
“The successful but incapacitated bidders in turn hire competent providers to render the service at market rates, then the proxy companies pocket the difference,” revealed Mr Ngumbi.
Mr Ngumbi cited Kilifi, where the county government risks losing over Sh103.8 million through inflated purchase costs for a revenue management system.
The anti-graft agency has revealed that the devolved unit allocated 25 per cent of its daily revenue collections to a private company called Aden Construction Company Ltd, which was procured illegally and lacks the required technical capacity and competence to install and operate an automated revenue collection and management system.
“Further evidence suggests that the scheme involves a private partner providing the system for free and getting a percentage of the revenue in return,” revealed Mr Ngumbi.
The commission has also revealed at least four loopholes deliberately created to facilitate theft of public funds through revenue management systems.
The agency says that private service providers have total control of the revenue management systems, with the county governments having no mechanism for ensuring accountability, which makes the systems easily manipulated to steal revenue.
In some cases, senior county officials have access rights to the automated systems with authority to delete or edit revenue data leading to diversion of revenue.
Further,absence of mechanisms to reconcile revenue management systems where different service providers collect revenue has been identified as another loophole for corruption.
EACC says that some of the 47 county governments also have multiple bank accounts,where collected revenue is deposited, in some cases, over 10 accounts,exposing them to corruption.
“As a result, many county governments are not able to meet their revenue targets with some doing worse in revenue collection than even local authorities that existed before them. Counties could be losing billions of shillings to corruption. Others have stagnated at the same levels despite an increase in revenue streams,”said Mr Ngumbi.
In August, EACC chairperson Bishop David Oginde launched a report dubbed; “Devolution at 10 Years: Highlights of the State of Corruption in County Governments” where he unpacked widespread graft in counties unearthed over the past 10 years.
The most prevalent malpractices in the counties,according to the report, included embezzlement of public funds, conflict of interest, procurement fraud, payroll fraud mainly through ghost workers, fraudulent pending bills and blatant disregard of laws relating to prudent management of public affairs.
Further, Bishop Oginde said EACC had received and processed 10,543 reports of corruption and unethical conduct relating to county governments.
Also Read: Sh11.2bn lost annually to water theft, leaks
Upon analysis, 7,310 reports were found to be within the mandate of the commission and taken up for investigation, whereas those outside the EACC’s purview were referred to the authorised agencies for action.
According to the report, the assets of several county workers had been forfeited to the government following recovery proceedings by EACC.
Bishop Oginde said EACC received 2,994 reports of embezzlement and/or misappropriation of public funds and 1,130 relating to public procurement irregularities. Abuse of Office had 840, while unethical conduct noted 747 reports. Others were; bribery (578) fraudulent acquisition and disposal of public property (315), conflict of Interest (220), unexplained wealth (198), fraud (126), maladministration (126), Penal code offences (17), and breach of trust (19).
