MPs summon PS Kamau Thugge over glaring financial irregularities

National Treasury Principal Secretary Kamau Thugge has been summoned by MPs over glaring financial irregularities in the ministry’s books of accounts as contained in the 2016/17 report of Auditor-General Edward Ouko.

The summon to the PS comes after he gave a wide berth to an invitation to appear before the Public Accounts Committee (PAC) of the National Assembly to respond to the irregularities. 

“I now order that summons be issued by the office of the Clerk requiring that the PS appears before this committee without fail,” Ugunja MP Opiyo Wandayi, PAC chairperson, said on Thursday.

Mr Wandayi, did not, however, make public the date when the PS will appear before the committee.

FINANCIAL IRREGULARITIES

Among the issues, Mr Thugge was required to explain include the Sh811 billion in outstanding loans to various state corporations and irregular payment of pension.

The report notes that some institutions have not been repaying their loans once they mature while the failing ones continue to receive additional funding even when they are underperforming.

This is exhibited by the continued growth of the outstanding loans with high chances that the outstanding loans may not be repaid leading to bad debts and loss of public funds.

The ministry is also on the spot for irregular payment of pensions.

TEACHERS' PENSIONS

This includes civil pension of Sh22.9 billion which includes Sh1.3 billion paid to retired teachers during the period under review without being properly supported.

The report notes that the payment was not supported by documents such as the last pay slips as required by the Pension Act for proof that the payees were once teachers.

“The management has not explained the basis of calculating the pensions and why the payments were made without adherence to the laid down pension payment procedures.

Therefore, the payment of civil pension could not be confirmed,” the report says.

Further, the report questions the Sh4.6 billion in military gratuity, which it says is overstated by Sh86,584,111.

“It has not been explained as to why the overstatement was made.”

The Treasury is also on the spot for overstating the ordinary pension of Sh58,656,973 paid to Asian and European Pensioners, who retired due to Africanisation of the public sector after independence in 1963.

According to Mr Ouko, their life certificates were not availed as required by the pension internal controls to confirm that the pensioners are still alive before payments were effected.

This essentially means that the propriety of the expenditure cannot be confirmed.

PARLIAMENTARY PENSION

The PS was also required to explain why his ministry failed to submit audited parliamentary pension accounts.

During the year under review, civil and commuted pension of Sh182,438,610 and Sh11,238,732 respectively, were paid to the retiring or retired MPs.

The failure to submit the audited parliamentary pension’s accounts before the payments were made therefore means that it may not be possible to confirm the validity and accuracy of the expenditure incurred.

As if this was not enough, weak payroll internal controls were noted on the examination of the pension records.

The validity of pension paid is not confirmed with the retiree data from other government agencies’ databases — the registrar of persons for identification data, Kenya Revenue Authority (KRA) for Personal Identification Number (PIN) and Integrated Payroll and Personnel Database (IPPD) for employment details. 

The military personal files from the department of Defence are not submitted to the pension department to enable verification of the retirement claim details and basis of pension computation. 

Life certificates for pensioners are not availed to confirm pension is not paid to deceased pensioners. 

The absence of such controls means that the department runs the risk of being exposed to irregular payments of pension to non-existence pensioners.