MPs to refund Sh2.7 billion illegal house allowances

Members of Parliament have failed in their bid to stop recovery of at least Sh2.7 billion they earned as illegal allowances.

The lawmakers, jointly with the Parliamentary Service Commission (PSC), had moved to the Court of Appeal seeking suspension of a High Court order that directed Clerks of the National Assembly and the Senate to deduct the illegal allowance payments in full from each of the lawmakers' salaries.

From 2018 to December 10, 2020, when the High Court issued the order, each of the 418 legislators used to earn a monthly allowance of Sh250,000 for accommodation and house allowance, without approval of the Salaries and Remuneration Commission (SRC). 

The decision by the PSC to pay MPs the allowance was made on April 24 2019, and the payments were backdated to October 2018.

During the period of 26 months, each MP had cumulatively received Sh6.5 million, and each is now required to return the same to the Exchequer. 

They wanted the Court of Appeal to suspend recovery of the money and allow them to continue receiving the allowances, pending determination of their appeal. 

But a three-judge bench of the appellate court declined the request, saying that although the case is arguable, its purpose will not be defeated if the lawmakers refund to the Exchequer the illegal allowances already paid.

"If the appeal succeeds, all that will happen is that the SRC will pay the arrears that will be owed to the Attorney General. We fail to see how the appeal will be rendered nugatory if stay orders are not granted," ruled justices Wanjiru Karanja, Gatembu Kairu and Jamila Mohammed. 

The legislators are against the High Court's finding that the PSC encroached into the mandate of the SRC by granting them the disputed allowances. 

The High Court bench comprising Justices Pauline Nyamweya, Weldon Korir and John Mativo ruled that the Constitution and statutes do not give the Parliamentary Service Commission any specific function to set salaries and allowances of MPs and parliamentary staff. 

The judges said the only financial functions allocated to the PSC by the Constitution are budgetary, hence SRC had acted within its mandate by directing the Clerks of Parliament not to pay the said allowances. 

"The accounting officers for the PSC and Parliament are therefore also culpable for failing to undertake their obligations under the Public Finance Management Act in this regard. For this reason, we therefore find that the said accounting officers are under obligation to recover the money paid to MPs," said the bench. 

But in their appeal, the legislators argue that the High Court judges misinterpreted the Constitution in as far as the roles of the SRC viz a viz those of the PSC are concerned.

In an affidavit sworn by Jeremiah Nyegenye, who doubles up as the Clerk of the Senate as well as the Secretary to the PSC, they state that the role of the SRC concerns the remuneration and benefits payable to all State Officers, whereas the PSC deals with facilitation of members of Parliament.

While faulting the High Court judges for issuing the declarations that they did and for ordering a refund of the money that had already been paid out, the Clerk reiterated that the PSC has mandate to facilitate the lawmakers to enable them carry out their constitutional and parliamentary duties of serving the electorate.

"PSC is an independent constitutional body just like the SRC, albeit with different mandates," said the Clerk. 

In opposition to the application, SRC Chief Executive Officer Anne Gitau maintained that the payment of the allowances was illegal and the same should not be allowed to continue.

"It is in the public interest that the amounts paid out from public funds be returned or be recovered from the Members of Parliament," said Ms  Gitau. 

She explained that the only housing benefit approved by the SRC is the benefit to a select group of State Officers who include the President, Deputy President, the Chief Justice, Deputy Chief Justice, County Governors, County Deputy Governors and Speakers of the County Assemblies.

In urging for upholding of the High Court decision, Ms Gitau maintained that the judgment interpreted the law correctly and that the pending appeal is not arguable.

Attorney General Kihara Kariuki also opposed the MPs' application, saying there is no gurantee that taxpayers would get back the money since there is no certainty all the MPs will be re-elected. 

The case is a consolidation of three petitions filed by rights activist Okiya Omtatah and SRC, with support of non-government organizations such as Katiba Institute, Law Society of Kenya and Transparency International-Kenya.

Mr Omtatah stated that MPs are entitled to a mortgage of Sh20 million per term to cater for their housing needs, therefore, any further house allowance would be unreasonable. He said the allowances had been backdated to April 2018.

In addition, he states that the allowances awarded to MPs will create inequity in remuneration and benefits for other State Officers, thus lead to demands for house allowance by other State Officers. 

SRC stated that on January 31, 2019 the PSC wrote to it asking it to approve house allowances to be paid to each MP at the rate of Sh250,000 per month, to enable them to rent houses within Nairobi in locations befitting Members of Parliament. 

Further, that the reasons given by the PSC in support of their request were that Governors and Deputy Governors enjoy a housing benefit, hence MPs too must be paid a housing allowance and that failure to pay them a housing benefit discriminates against them.

They also argued that section 31 of the Employment Act requires an employer to provide an employee with reasonable housing accommodation near the place of employment. 

Thirdly, they submitted that in other countries, MPs are paid an allowance to enable them hire a hotel room or lease a house where Parliament is located. Lastly, they told the court that a house allowance of Sh250,000 per month had been budgeted for each MP in the 2018/2019 financial year.

[email protected]