Former Embu County ministers under ex-Governor Martin Wambora benefited from irregular loan facilities with repayment periods of up to 15 years.
Former Embu County ministers under ex-Governor Martin Wambora benefited from irregular loan facilities with repayment periods of up to 15 years, an audit report has revealed.
The Development Bank of Kenya is at the centre of the inside deal that has left the county government facing a Sh110.8 million loss, according to the report by Auditor General Nancy Gathungu, which exposes an "unholy alliance" between the bank and the devolved unit.
The revelations emerged during a Senate oversight committee meeting on Thursday, which considered an audit report on the Embu County Car Loan and Mortgage Fund for the financial years between 2019 and 2022.
Ms Gathungu also described the Embu County Youth Trust Fund, where more than Sh48 million was disbursed to the youth between 2014 and 2021, as a "political tool" without collaterals, with the devolved unit now unable to recover the money.
The development has prompted the committee to consider summoning Mr Wambora and former county officials to shed light on the management of the two funds or hand over the reports to the EACC for investigation.
Appearing before the Senate Committee on County Public Investments and Special Funds chaired by Vihiga Senator Godfrey Osotsi, Governor Cecily Mbarire revealed how the former CECs irregularly advanced car loans and mortgages.
48 months
She said the top officials were given loan repayment terms beyond the required 48 months, with some terms ranging from 2019 to 2034.
Interestingly, the loans were advanced without collateral, including log books and title deeds.
The auditor added that the county government could not produce any documents to confirm whether the loans were charged against the logbooks and title deeds of the beneficiaries.
In a brazen act of misuse of public funds, some eight officials were even given loans three months before the end of their contracts with the county government.
As part of the deal with the bank, the financial institution also kept the entire 3 per cent interest charged on the loans, ostensibly as an administrative cost.
The governor revealed that the ministers were given preferential treatment because some of them had accounts with the bank and were therefore given preferential treatment, including loans above the set limits.
The county’s regulations and the salaries and remuneration commissions set the car loan limit at Sh4 million and Sh20 million for mortgage.
“We are in the dark of at what point the beneficiaries got to the point of being given loans above the set limits. The bank has, however, owned up,” Governor Mbarire said.
She told the committee that the bank owned up to not pursuing the repayments and has agreed to convert the loans into commercial loans.
“We have told the bank to make sure we get back our money. The headache is now with the bank and not the county government,” said the governor.
“We will ensure Embu does not lose money because of the irregularities. The bank has agreed to give us the money by the end of this month,” she added.
Nominated Senator Tabitha Mutinda described the terms as an abuse of power, saying advancing loans with repayment periods of up to 2034 is unheard of.
Small people
“These were not small people to get such favours. They even received their gratuity but are not servicing their loans and it is curious that no check-off system was put on their salaries as a way of repaying the loans,” she said.
This is after it emerged that some two officers, who have since left employment, have not made any repayment since they advanced their loans in 2019 and are now in arrears of Sh19.9 million.
The committee chairperson directed the county government to have further engagements with the bank to ensure logbooks and title deeds as well as the agreement between the bank and the county government are provided to the auditor for verification.
“All the queries have to do with the bank as it looks like they were not following the law. We need feedback on your engagement with the bank before we make a ruling on the matter,” said Mr Osotsi.
Governor Mbarire told the committee her administration does not know how it will recover Sh48.3 million disbursed from the Embu County Youth Trust Fund.
She said that of the Sh54.7 million disbursed, only Sh6.4 million has been repaid and it will be difficult to enforce repayment as the funds were issued without collaterals.
Recover the money
“I don’t know how to recover the money. Our hands are tied in enforcing the repayments as no security was provided before the money was given out to the youth,” said the UDA chairperson.
“This was a fund most misused as it was used as a political tool and I will be lying to the committee as I am not convinced with the responses,” she added.
Narok Senator Ledama Olekina said the committee should forward files concerning the Fund to the Ethics and Anti-Corruption Commission to commence investigations.
“The statement by the governor leads us to conclude that everything that was happening in Embu under Wambora borders on criminality,” said Mr Olekina
“We are left with two options of handing over the files to EACC to investigate the criminal enterprise or invoking Article 226 of the Constitution to summon the former governor before this committee.”
Elgeyo Marakwet Senator William Kisang added: “It is very unfortunate that the fund was used as a political tool and now the county government has lost more than Sh48 million in the process.”
