Audit reveals theft and plunder of public funds in the counties

The Auditor-General has released reports exposing ruthless expenditure of devolved resources in the county governments and blatant theft of public funds in what paints a dark future for devolution.

The conspiracy to misuse funds both by the county governments and assemblies is believed to be the reason behind instant village millionaires in many regions.

Several county executive and county assembly audit reports signed by Auditor-General Edward Ouko expose massive corruption and a careless spending culture in total disregard of existing procurement regulations even as the clamour for more cash continues.

The Nairobi and Mombasa county governments face audit queries for failure to account for millions of shillings collected by their revenue departments.

Kisii County is in focus for operating 64 different bank accounts whose necessity the county executive failed to explain to the auditors.

In some cases, members of the county assembly whose main responsibilities are oversight, legislation and representation, convert themselves into implementers of executive policies after irregularly accessing cash by blackmailing governors.

In Nairobi County, the auditor has raised the red flag over failure by the county government to bank some Sh252 million, which is part of Sh5.5 billion collected as revenue by the county.

“Records made available for audit revealed that during the period 1 January, 2013 and 30 June, 2013, a total of Sh 5,511,732,231.00 was collected from the various sources of revenue but only Sh 5,258,849,088.00 was banked resulting to under banking of Sh252,883,143.00,” the report says.

The auditor was further concerned by the increase of pending bills by 350 per cent, threatening the future operations of the county.

Says Mr Ouko: “During the year under review, the county government had pending bills totalling Sh53,312,379,122 as at 30 June, 2014 compared to balances in the previous year of Sh11,069,683,000 as at 30 June 2013, an increment of 381.6 per cent which cannot be confirmed.”

The auditors also flagged the payment of Sh30 million as legal fee to a city-based law firm describing the deal as irregular.

“The Nairobi City County paid Sh30,000,000 on 7 January 2014 to Prof Tom Ojienda and Associates for legal services. The legal fee for HC petition No.486 of 2013 Nairobi Metropolitan PSV Sacco Ltd vs County Government of Nairobi quoted Sh92,800,000, which was, however, revised down to Sh30,000,000 after negotiations,” said the auditor.

He further stated: “The authenticity of the payment in respect of legal services of Sh30,000,000 cannot be confirmed and the adjustment of the legal fee note by 68 per cent could not be explained.”

The report also exposed car park revenue scandals worth millions of unaccounted for but collected revenue.

“Daily returns as per parking department showed a total collection of Sh1,680,132,742.00 while total parking revenue as per LAIFOMs amounted to Sh1,607,494,953.00 resulting to unreconciled and unexplained variance of Sh72,637,789.00,” said the report.

FOREIGN TRIPS

At the Nairobi County Assembly the auditor’s query focuses on millions of shillings spent on foreign trips.

In one instance, seven MCAs and a county official received imprests totalling Sh1 million to go and watch the London Marathon.

“The trip was for four days from 11 April to 15 April, 2014. No invitation letter was produced to confirm whether the county assembly members and the officer were invited. Further there was no evidence from either the Speaker of the County Assembly or the Clerk that the trip had been authorised. As a result, the validity of the expenditure could not be ascertained,” the auditor states.

In Mombasa, the auditor has exposed how the county government failed to bank part of the Sh1.7 billion revenue it collected during the financial period under review.

“According to the county revenue fund bank account statement, a total of Sh1,219,606,876 was transferred to the account as at 30 June, 2014, which implies that Sh496,262,124 was not banked in the county revenue fund account,” says the report.

County governments are not allowed to directly spend money they collect as revenue until approval is obtained from the Controller of Budget’s office.

Another Sh85 million was lost after the county government ordered waiver of cess on selected transport companies at Shanzu without following due process.

The auditor’s report has also put the 48 Nandi County Assembly members on the spot after they obtained a total of Sh245 million as mortgage and car loans but used the money for other errands.

“As at 30 June 2014, a total of Sh245,000,000 had been incurred on the facility.  It was, however, noted that none of the members purchased a residential house or a car but instead used the funds to repay personal bank loans which were outstanding as at 31 March 2014,” the report reveals.

Each of the 48 MCAs and their speaker, according to the report, accessed Sh5 million of which Sh3 million was to support them buy houses while Sh2 million was to facilitate them to purchase new cars but none of them spent the money on the stated items.

In Siaya, the auditor has reported a major fraud that led to loss of millions of shillings after fishy transactions were made through IFMIS on the county accounts.

“Although the County Government recovered Sh80,354,304 and credited back to the county’s respective accounts, it lost Sh4,237,471 which was part of the fictitious payments,” the report reveals.

NON-EXISTENT

Siaya County Government also paid Sh21.6 million as school fees through its bursary programme but the auditor traced some of the names of the beneficiaries indicated to have been in boys’ schools to non-existent students in local girl schools.

“However, records showed that some girls’ beneficiaries were shown to be in boys’ schools and vice-versa. We could, therefore, not confirm how bursaries for girls were remitted to boys’ schools and vice versa,” says the report.

In Kisii County, the auditor has raised concerns over the opening of 64 different bank accounts by the County Executive.

“The County Government during the year under review opened sixty four (64) bank accounts both at headquarter and sub-counties. A list of officers with authority to incur expenditure and operating of the bank accounts were not made available,” says the report.

In Migori County Assembly, the auditor has recommended that officials of the County Assembly Public Service Board and members of the County Assembly Tender committee members be surcharged to recover Sh2 million over payment they obtained.

The report reveals that the five CASB members held 94 sittings but overpaid their allowances disregarding guidelines issued by the Salaries and Remuneration Commission.

“The members composed of the chairman, vice-chairman and three other members were paid Sh12,000, Sh10,000 and Sh8,000 instead of Sh6,500, Sh5,200 and Sh3,900, respectively, as stipulated by SRC,” says the report.

County Audit reports continues