Ouko: No due diligence in Sh1.5bn Ruaraka land deal

Auditor-General Edward Ouko has faulted the Ministry of Education for irregularly spending Sh1.5 billion taxpayers' money for compulsory acquisition of land in Ruaraka, Nairobi from city businessman Francis Mburu that ought to have been surrendered to the government for public utilities.

Mr Ouko’s position comes after the High Court on June 28, 2019 ruled that the 17.7-acre city land in Ruaraka belongs to the government and ought not to have been paid for by the same government.

AUDIT REPORT

The audit report for the year ending June 2018 tabled in the National Assembly by Majority Leader Aden Duale last week shows that the amount was spent on the land in question where two public schools and a chief’s camp stand.

“In the circumstances, it has not been possible to confirm that the expenditure totalling Sh1,500,000,000 was procedural and a proper charge to public funds,” Mr Ouko says in the report that is congruent to his earlier findings on the National Land Commission (NLC) financial accounts, currently before the Public Accounts Committee (PAC).

DUE DILIGENCE

“Had due diligence been observed by all parties in the whole transaction, compensation for the land that ought to have been surrendered for public utilities should not have occurred,” he adds.

The payment, done without budgetary allocation and the requisite approval from the National Assembly, was part of the Sh3.269 billion valuation of the land.

It was wired to Huelands Limited, one of Mr Mburu’s companies, by the NLC, with a precision never witnessed before.

It was in the middle of a financial year (January 2018) and at a time the government was literally struggling to raise revenue to finance its budget.

NLC is the only State agency constitutionally mandated to acquire land on behalf of the government.

NLC MISLED CS

The High Court judges indicted NLC, then chaired by Mr Muhammad Swazuri, for misleading the Ministry of Education on the irregular compulsory acquisition from Mr Mburu, who, through his two companies – Afrison Export Import Limited and Huelands Limited – claimed ownership.

The balance was to be cleared mid-2018 through a supplementary budget but the Budget and Appropriations Committee (BAC) of the National Assembly, chaired by Kikuyu MP Kimani Ichung'wah, slammed breaks on the matter after “smelling a rat”.

Mr Ouko says that the partial payment was made in violation of the Public Finance Management (PFM) Act as the acquisition had not been budgeted for.

FUNDS

The PFM Act provides that no government project should be undertaken without funds being set aside as approved by the National Assembly.

But this was not the case for Education PS Dr Belio Kipsang who, as an accounting officer of the ministry, approved the payment even after a task-force that he formed advised against paying for the land.

It is not clear why Dr Kipsang, who disregarded the report of a task-force that he formed, continues to remain in office. The task-force advised the ministry against the compulsory acquisition as the land was public.

The recent High Court ruling and the attendant reports of parliamentary investigations into the matter have equally made Dr Kipsang’s continued stay in office untenable.

MBURU'S CLAIMS

Though Mr Mburu had claimed the land to be his, Mr Ouko is of a different opinion.

According to the Auditor-General, in 1984, Afrison Export Import limited and Huelands limited, the alleged proprietors of the land, applied for its subdivision and development to the then Director of City Planning.

In a reply dated March 28, 1984, the Director City Planning gave a conditional subdivision approval where the owners were to set aside land for public utilities in line with the Physical Planning Act.

But the developers, in letter dated April 5, 1984, declined and stated that they were no longer interested with the conditional approval and wanted the entire application for subdivision cancelled.

NO APPROVALS

But they would go on to develop the land without the requisite approvals.

“The application for development is required to be accompanied by plans and particulars as are necessary to indicate the purposes of the development and in particular show the proposed use and density and the land which the applicant intends to surrender,” Mr Ouko says.

But despite this, NLC, on September 13, 2016, wrote to the then Education Cabinet Secretary Fred Matiang'i informing him of the complaint filed with the commission by Afrison Export Import Limited that the two schools have been occupying the firm’s land for 30 years without compensation.

The commission, on April 24, 2017, in response to the Ministry’s letter of February 7, 2017, instructed it to set aside Sh3.269 billion as compensation for the land.