Revealed: Fraud and waste of tax billions

Transparency International Kenya executive director Samuel Kimeu speaks at a Nairobi Hotel during the release of the National opinion poll on Kenyan Expectations of Corruption trends under the newly promulgated Constitution as elsewhere the Controller and Auditor-General released a report showing how billions of taxpayers money was wasted last year.

The government lost billions of shillings from the tax kitty during the 2008/2009, according to the latest Controller and Auditor-General’s report.

Discipline was so poor that ministries spent fortunes and then pushed the bills to the following financial year in the so-called pending bills.

But the biggest scandal is in imprests where government officials are given money for travel, accommodation and other official expenses, which they fail to account for. In the period under review, public officials failed to provide proof of how they spent Sh3.4 billion in imprests.

Paid to fake IDPs

In some cases, the officers could not explain how they spent public money. Some of it was paid to fake internally displaced persons (IDPs) in apparent widespread fraud.

A total of Sh7 billion was poured into funny imprests or nobody can explain how the money was spent.

So prevalent is the imprest abuse and fraud that some of the civil servants have left the service holding the money, meaning that it will never be recovered. The auditor questions why officials were allowed to pile up unaccounted for imprests, even though there were rules on accounting for such funds.

The worst offender by a mile is the Medical Services ministry, headed by Prof Anyang’ Nyong’o, whose officers owe the government Sh2.8 billion in unsurrendered imprest, enough money to run the Judiciary for a whole year.

The second worst offender is the sister ministry of Public Health and Sanitation, headed by Mrs Beth Mugo, which has an imprest debt of Sh308 million. Others are Foreign Affairs (Sh35.6 million) Finance (Sh30 million), Education (Sh27 million), Provincial Administration (Sh11.8 million) and the National Assembly (Sh11 million).

The funds owed as imprest are enough to pay for free primary education for a term.

The auditor accuses ministries and departments of having weak controls and poorly managing imprests. “In other circumstances, some ministries and departments issued to officers additional imprests before such officers had surrendered or accounted for balances previously issued,” said the report.

“Although the Government Financial Regulations and Procedures clearly spell out the guidelines for control and management of imprests, as supplemented by various circulars issued by Treasury from time to time, no significant efforts appear to have been made during the year to ensure compliance with such guidelines.”

Treasury in May came up with a new regulation banning civil servants from keeping the short term travel allowances beyond 48 hours after official duties.

Finance permanent secretary Joseph Kinyua also asked all accounting officers to seek help from Attorney General Amos Wako to immediately start recovering outstanding imprests in their ministries and departments. Mr Kinyua’s rules were meant to guard against the habit of officers’ failing to account for the imprests on time, fraud, and unnecessary audit queries.

Some of the Sh100 million meant for people displaced in the 2007 post-election violence may have gone into the wrong pockets.

In Molo, the Special Programmes ministry allowed the local district commissioner to spend Sh361 million in the resettlement of IDPs. Each affected family was to receive Sh10,000 in cash and an extra Sh25,000 for every house burnt.

Although the DC received the Sh361 million, an amount of Sh13.4 million “appears to have been paid to individuals who were not in the approved list of IDPs and were therefore not eligible for the support”.

In Nakuru District, Sh33 million meant for the displaced people could not be accounted for. The area received Sh135 million to support the IDPs.

“A further Sh74 million paid to nine other officers in the district between August 2008 and November 2008 could not also be accounted for due to lack of various supporting documents, including IDPs photographs and copies of identity cards,” the report said.

In Uasin Gishu, records maintained at the DC’s office in Eldoret had no evidence for propriety of a sum of Sh8.4 million paid out to IDPs at the Eldoret show ground.

“The expenditure could not be confirmed due to lack of a list of payees and witnesses to the payments,” the report said.

“In addition, the payments do not appear to have been authorised by three officials as required.”

Sh246 million was paid to the DC to support IDPs.

The report also spoke of a payment partnership programme with the Cooperative Bank of Kenya through which Sh207 million went through for the IDPs in Molo, Koibatek and Uasin Gishu districts.

The auditor’s report suggests a balance of Sh8.5 million, which the bank ought to have refunded the ministry as at September 30, 2009, had not been surrendered.

“No records have been seen to confirm that a refund of this particular amount has been received by the ministry.”

The report also questions a deal to supply 500 vehicles meant for the Provincial Administration and the Police.

The audit report also showed that many ministries and departments have rolled over Sh16.4 billion as pending bills.


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