Bungling NLC cost taxpayers billions in irregular payouts

Passengers arrive at the Mombasa SGR station on July 13. The NLC is on the spot over irregular payments made for SGR land.

Photo credit: Laban Walloga | Nation Media Group

What you need to know:

  • Covering land compensation between 2014-17, the report has disturbing details for taxpayers. 
  • Ms Gathungu notes that, of the Sh23.11 billion, Sh14.29 billion transactions were marred with irregularities. 

Gifted with the ability to hop from one scandal to another, the National Land Commission (NLC) does not disappoint when it comes to shoddy multibillion-shilling deals. In another shocking report, Auditor-General Nancy Gathungu has exposed a chaotic body that doesn’t follow the rule of law when handling public funds. 

Sanctioned by the National Assembly’s Committee on Public Accounts (PAC), the special audit details high-level impunity, ranging from expenditures without approvals by the National Treasury to glaring irregularities. 

Covering land compensation between 2014-17, the report has disturbing details for taxpayers. The commission received Sh23.11 billion from other State agencies for compulsory acquisition of land for public projects, but the expenditure has left more questions than answers.

A huge chunk of the money went into the flawed compensation for land along the Sh327 billion Mombasa-Nairobi Standard Gauge Railway (SGR) line corridor and Ms Gathungu has now prodded the Directorate of Criminal Investigations (DCI) and the Ethics and Anti-Corruption Commission (EACC) to take action against the NLC.

Acquiring land

Before acquiring land on behalf of other entities, funds would be transferred to the NLC account at the National Bank of Kenya. Other than the Kenya Railway Corporation (KRC), the other institutions were Kenya National Highways Authority (KeNHA), the Kenya Urban Roads Authority (KURA), the State Department of Housing and Urban Development and National Water Conservation and Pipeline Corporation (NW&PC).

Lamu Port South Sudan Ethiopia Transport (Lapsset) corridor project and the Tanathi Water Services Board also had transactions with NLC. While the acquisition of the parcels was necessary, NLC allegedly abused public finance laws.

These include failure to maintain a database or register of all public land acquired and failure to conduct searches at the registry. The queries could drag former chairman Muhammad Swazuri back into the spotlight.  Ms Gathungu notes that, of the Sh23.11 billion, Sh14.29 billion transactions were marred with irregularities. 

As a result, the government could lose up to Sh9.57 billion because of the NLC’s failure to conduct searches at the registry to confirm that the parcels acquired were not public land. The absence of fairness and accountability in the process saw the NLC commit Sh7.74 billion.

The commission heavily relied on valuation compensation schedules that were either not dated, or not signed. In some cases, payments were made without evidence of valuation reports.

False claims

 In such circumstances, it was impossible to validate instances of over compensation, double compensation in different areas or false claims of compensation.

The report indicates that Sh2.12 billion was transferred to the commission for the acquisition of land along the Lapsset corridor and Sh3.58 billion for land in Thwake Dam by the Tanathi Water Services Board.

Kura had Sh867.63 million transferred for the Nairobi Eastern link road and Sh715.36 million for the Meru Eastern and Western bypasses. KeNHA sent NLC Sh224.20 million for the Kangema-Gacharage (C 70) road in Murang’a.

The State Department of Housing and Urban Development had Sh135.47 million set aside for the Murang’a sanitary landfill project while NWC&PC had Sh94.32 million sent to NLC for Muruny ‘Siyoyi’ water project.

The commission is also in hot water for spending Sh226.25 million without the evidence of approval by the National Treasury, which is contrary to the Public Finance Management (PFM) Act.  Section 68 (1) of the PFM Act requires accounting officers to ensure public resources are used in a lawful and authorised manner. The funds in question were proceeds of monthly interest earned on deposits by NLC for the operational expenditures.

The audit notes that Sh92.16 million and Sh134.08 million was earned in interest during the 2015/16 and 2016/17 financial years, respectively. “These funds had not been budgeted for and there was no approval given by the National Treasury or Parliament for the funds to be utilised for this purpose,” the report notes.

The failure by the commission to adequately respond to audit queries on time, which is against the PFM Act, also cast doubts on the expenditure of Sh3.40 billion. In another strange deal, the government may lose up to Sh221.38 million for payments made to affected persons along the Embakasi Station railway reserve, whose titles had been “revoked by the NLC committee on review of grants and dispositions”.

Public land

This means that it was public land and that the government may have ended up acquiring its own land. The beneficiaries are Dasahe Investments Ltd (Sh89.93 million) for 0.904 hectares, LR No 9088, Sh43.82 million for 0.44 hectares, LR No 9087 and Sh43.82 million for 0.44 hectares, LR No 9085. Olomotit Estate Ltd got Sh43.82 million for 0.44 hectares, LR No 9086. 

Interestingly, all the payments were effected through Keboiwo Investment Ltd, which had not been listed as the owner of the acquired parcels. The audit report was unable to establish the circumstances under which NLC effected payments to a company that was different from the one that had been listed.

Kenya Railways Corporation (KRC), the acquiring entity of the SGR line land, risks losing Sh21.79 million over the questionable acquisition of 12.98 hectares in Sultan Hamud. The land was compulsorily acquired for the construction of an SGR station.

But the KRC would later redesign the SGR route, resulting in the relocation of the station to Emali, without giving an explanation. This means that the Sultan Hamud land remains idle despite government funds having been used.

Although the Land Act requires the NLC to maintain a register of all land acquired, Ms Gathungu established that the commission does not have one.

The law states that the register should be geo-referenced and authenticated by the statutory body responsible for survey, in this case the Survey of Kenya (SoK).

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