Kenya budget blunder: What MPs found

MPs investigating a Sh10 billion Treasury blunder will on Wednesday recommend an independent investigation into the budget making process going back three years.

Leaks of their proposals came as a serious financial crisis gripped the Government as a result of the flaws in the Supplementary Budget, blocking all payments by ministries.

Those who have seen the report by the House and Finance and Budget committees, to be presented in Parliament on Wednesday, said the MPs will demand the withdrawal of the error-ridden supplementary budget passed by the House two weeks ago.

They will also require Finance minister Uhuru Kenyatta to report to the House actions he has taken against Treasury officials responsible for the error that has crippled financial transactions in the entire government system.

Sources said the MPs found out that the discrepancy which has affected 36 ministries was caused by a computer error and have demanded that the officer responsible be identified and punished.

The MPs are understood to have expressed reservations about the budget making process and recommended that an external investigation be launched at the Treasury to find out if there have been anomalies in the last three budgets.

Sources in the know also said that the Supplementary Estimates approved by Parliament at the end of last month will be withdrawn and a fresh set of estimate books printed and taken to the House by the Finance minister to meet the extra cash that the Government needs to bridge its spending in the light of famine and post-election violence.

These are some of the findings that the joint committee is expected to table before Parliament as ordered by Speaker Kenneth Marende.

Other recommendations were said to be that Treasury comes up with a tamper-proof system of budget making to avoid mistakes likes the ones which resulted in the more than Sh10 billion blunder.

Riddled with problems

It is also understood that the joint committee wanted investigations by an external body to find out who was responsible for the alterations of the figures.

In addition, they called for a forensic audit into the budget making systems at Treasury to ensure that only a few senior officers have access to the budget and supplementary estimates because such mistakes were likely to drive the public to lose confidence in the Treasury.

The committee found that the discrepancies pointed out by Imenti Central MP Gitobu Imanyara were slightly higher than the figures he presented to Parliament. They also found out that the presentation of data during the budget making process was riddled with problems due to the changes that have been made in the process.

In the past, the fixed column could not be changed but in the latest system it can be altered and that was why there were discrepancies in the supplementary estimates.

They recommended that it must be established whether the discrepancies were as a result of computer software, malice, or sabotage. They also noted that Mr Kenyatta reacted angrily and arrogantly without checking the facts.

On Tuesday, several ministries reported that they could neither make payments nor purchases after the ministry of Finance disabled the computer system that controls Government financial operations.

The Government operates an integrated financial management system which processes all payments including validating vouchers and issuing of cheques.
Currently, the system, which is supported by the World Bank, has been out of action since Monday. It means that if the controversy over the supplementary budget persists for long, essential government services could soon grind to a halt.

Ministries were only able to pay imprest. Neither current contractors nor pending bills could be processed.

Experts said that once passage of the Appropriations Bill was postponed, it became impossible to load the figures in the supplementary budget into the system. Reports suggest the system was switched off after the delay from Parliament, cutting off funding.

In the Supplementary Budget, Mr Kenyatta had sought Parliament’s permission to spend Sh26 billion. But discussion on the Appropriation Bill was suspended after Mr Imanyara raised questions about the integrity of the figures contained in the budget.

Parliamentary committees on Tuesday postponed tabling of a report to Wednesday, further raising the prospect of paralysis in government operations.

The reports come as voluminous supplementary expenditure books were set for reprinting in an unprecedented move. This follows the extensive distortion of printed estimates, a column that is supposed to be fixed, in the Supplementary Budget.

In what could be a costly affair, Treasury insiders yesterday said the distorted figures cannot be used without legal complications.

The new twist comes as detectives spent another day at Treasury building trying to unravel the mystery behind the numbers. It is understood that indeed, the security operatives first visited the building on Friday after it became apparent that the discrepancies in the budget were not an error of omission.

Anxiety has gripped staff of the Finance ministry since it became clear top officials were resorting to criminal justice. “The investigations are not only meant to get someone sacked but also taken to court,” said a top official at the centre of the saga.

Investigators are concentrating on the Budget and Government Technology and Information Services, the departments ultimately responsible for sending the documents to the printers. Key staff members in the two departments have been questioned by police.

However, the mood amongst some staff members is gleeful as they sense heads could role and leave certain positions open for occupation. “Some are behaving as if they have just had their first born,” an official said.

MPs familiar with the contents of the report expected to be tabled in Parliament today, said the joint committee would recommend an independent forensic audit into the budget-making process at Treasury for the last three years.

They raised fears that MPs could have been approving figures whose details could have been manipulated by officials at the ministry.

They found that whereas the final figures of the estimates were correct, there was a variation of Sh10 billion in the body of the supplementary estimates.

MPs were convinced that the variations could have been happening for some time at the Treasury without the knowledge of Parliament and the public.
They recommended that the Fiscal Management Bill, which the President rejected, should be revived by Parliament and signed into law by the President to ensure that MPs interrogate the budget-making process to avoid future discrepancies.

Those who will be found responsible for the alterations by the forensic audit should be punished accordingly.