Audit shows Sh1bn lost at Moi varsity

Acting Moi University vice-chancellor Laban Ayiro at a workshop held at Laico Regency hotel in Nairobi on September 28, 2016. Auditors found that 3,068 students at the university have been under-invoiced to the tune of Sh149 billion. PHOTO | DIANA NGILA | NATION MEDIA GROUP

What you need to know:

  • The report, which has been handed to the Ethics and Anti-Corruption Commission (EACC), further indicates that the university operates 56 bank accounts, many of them suspect.
  • The auditors from the National Treasury and Education Ministry moved in to the institution following a request from the university’s then acting Vice-Chancellor, Prof Fabian Esamai, on May 31.
  • An analysis of the university’s payroll established that there were 505 employees on the payroll who neither had any known designations nor departments of deployment.

Controversy-hit Moi University could have lost up to Sh1 billion in one of the worst suspected corruption scandals in a public-owned institution of higher learning, a new audit seen by the Sunday Nation reveals.

The government report released last month raises the red flag over Sh600 million in questionable transactions between the Eldoret-based university and the Rift Valley Textile (Rivatex), a company it owns and which is a facility for research, product development, extension and production.

The report, which has been handed to the Ethics and Anti-Corruption Commission (EACC), further indicates that the university operates 56 bank accounts, many of them suspect.

“The team was unable to verify the procedures followed in operating the said accounts and their operational details since essential documents were not availed,” the audit report says of the accounts.

The Special Audit Report on Financial Operations at Moi University for the Financial Years 2013/14 to 2015/2016 said the university failed to provide names of signatories to the accounts, authority for opening the accounts and bank statements, among other documents.

“It was not possible to establish whether all accounts are active or whether some are dormant,” the report dated September 2016 says.

The report is likely to raise fresh questions on the university, which is currently at the centre of a leadership row in which local leaders – including Uasin Gishu Governor Jackson Mandago and his Elgeyo-Marakwet counterpart Alex Tolgos – are opposed to the appointment of acting Vice-Chancellor Laban Ayiro on account that he is an “outsider”.

Instead, the Rift Valley leaders want Education Cabinet Secretary Fred Matiang’i to appoint Isaac Kosgey to the position to succeed Richard Mibey, who retired last month after 10 years as vice-chancellor.

They claim Prof Kosgey topped in the recent interview rankings even though the source of the information is not clear.

The auditors from the National Treasury and Education Ministry moved in to the institution following a request from the university’s then acting Vice-Chancellor Fabian Esamai on May 31.

According to the audit, transactions between Moi University and Rivatex East Africa revealed discrepancies amounting to Sh599.5 million.

FISHY PAYROLL
Although Rivatex records indicated that it had received Sh1.1 billion from the university, the mother institution’s records indicated that it had sent out only Sh479.3 million.

“The team was unable to do reconciliation because Moi University did not provide bank statements,” the report says in the findings that were shared with the institution’s management.

An analysis of the university’s payroll established that there were 505 employees on the list who neither had any known designations nor departments of deployment.

The “ghost” workers had gobbled up Sh541.5 million over the last three years, according to the report.

The auditors were so astonished that they noted the university lacked a clear recruitment policy, resulting in a “clandestine hiring of staff without due regard to staff establishment”.

Of the 3,898 staff working at the second-oldest university in the country, 2,949 or 76 per cent were non-teaching staff helping to illustrate a skewed recruitment policy that favoured low-cadre staff at the expense of lecturers.

The recruitment system had landed the university into a wage bill crisis of Sh3.9 billion.

This is nearly a billion more than the total annual government capitation of Sh2.8 billion.

“This has made the institution to resort to bank overdrafts to finance salaries,” the report says.

The mismanagement at the university was quickly leading to diminishing numbers of self-sponsored students, which have dropped from 23,000 in 2013 to 15,000 this year.

Although financial records provided showed that Sh108 million was collected from students for hostel accommodation, the university failed to provide supporting documents.

MISSING FUNDS
The report adds: “The financial management systems in regard to management of fees collections was extremely weak to the extent it resulted in high defaults and inaccurate information on fees status of the university.”

The auditors found that 3,068 students have been under-invoiced to the tune of Sh149 billion.

There was also a discrepancy of school fee arrears amounting to Sh748 million.

It arose from the fact that there was a difference between the university’s declared Sh430 million and the actual “extracted” amount of Sh1.2 billion.

The audit also found that Sh1.7 billion was collected from students who had not been invoiced, a “clear indication that the institution’s financial records cannot be relied upon for decision-making”.

According to the auditors, there were weak payment systems that were coupled with duplication of cheques and payment of vouchers amounting to Sh26.4 million and Sh311 million respectively.

The report raises the red flag over Sh256.9 million that was paid through 754 vouchers without indicating the campuses they originated from.

This made it difficult to trace and authenticate the expenditures.

Although the Sh74 million had been spent in the construction of the School of Law campus, the auditors could only verify vouchers amounting to Sh12 million.

Worse, payment amounting to Sh2.4 million under the library project was done long after the project had stalled.