Waiguru alleges plot to siphon Sh826m from NYS

An attempt was made to steal Sh826 million from the National Youth Service(NYS), Devolution Cabinet Secretary Anne Waiguru claimed on Thursday.

She was speaking at a press conference she had called to respond to press reports about procurement at the NYS, now one of the best-funded agencies of the government.

The Central Bank of Kenya is reported to have questioned payments since last November of Sh665 million by the NYS, including payments authorised by the new senior deputy director-general, Mr Gedow Harakhe.

Questions have also been reported by the press, particularly The Star, revolving around procurement, especially by companies that seemed to share directors.

Ms Waiguru said swindlers had infiltrated the ministry’s financial systems and created payments for non-existent supplies worth Sh826 million.

If criminals have the capacity to enter government procurement systems and create payments for fictitious purchases, then it raises serious questions about the security of public funds and the adequacy of the security for government computers.

'WE DIDN'T LOSE MONEY'

“It would have been a very huge loss had it happened,” she said, adding that the payments were stopped before they were completed.

“We didn’t lose money. If we hadn’t noticed, and they continued processing like there is something going on, maybe in a month they would have managed to do payments and we would have lost,” she said in her office in Nairobi.

“Somebody got into the system and made very many commitments of similar transactions. We noticed and asked the Director of Criminal Investigations to investigate. It could be external … but it could also be internal, but we do not want to speculate until the investigation is done.”

The NYS was transferred from the Youth and Sports ministry to the ministry of Devolution when the Jubilee coalition came to power. Youth empowerment is an important campaign promise for the government and a lot of money has been spent on the NYS.

Last year, it was allocated Sh17 billion to increase the number of recruits from 5,000 to 31,000. This year, the NYS budget stands at Sh25 billion.

There appears to be a quiet but vicious tussle, denied by all parties, between NYS Director-General Nelson Githinji and Ms Waiguru. The perception is that the assertive Ms Waiguru, or her close aides, has moved in and taken control of key operations at the NYS, marginalising Dr Githinji.

LUCRATIVE TENDERS

With a ballooning budget comes procurement and there is jostling for lucrative tenders to provide food, clothing, communication consultancies and other services.

It is likely that the allegations of tender shenanigans and illegal payments reported by The Star yesterday are the first shots of growing resistance against Ms Waiguru, especially her perceived control of the NYS.

Yesterday, she held a joint press conference with her principal secretary, Mr Peter Mangiti, and Dr Githinji to “clarify” allegations of illegal procurement and payments, malpractices in management and a poor working relationship between her and Dr Githinji.

They denied that there was a rift between Ms Waiguru and Dr Githinji over the appointment of Mr Harakhe as Dr Githinji’s deputy.

The three denied the payments had been made illegally and argued they had provided details to the CBK on the transactions.

“We affirm that (a) proper procedure based on the law on procurement was followed. The NYS did not give one tender, it did not give two. There have been more than 200 tenders,” said Devolution PS Peter Mangiti.

But while they argued that the Sh665 million paid out by the NYS was not under investigation, it was revealed that some of the supplying companies are owned by the same individuals, raising questions about whether due diligence had been done.

LARGE TRANSACTIONS SPOTTED

“People register many companies and we encourage them to do that to enhance their ability to compete.

“The law does not prohibit anyone from owning more than one company or being directors of more than one company. It is not illegal. You can’t start asking us why they are. How do you expect us to answer a question like that?” asked Ms Waiguru.

“You cannot stop someone from bidding in a tender more than once because that is how they think they will enhance their chances. Everybody uses their ingenuity to make sure that they compete amongst their peers.”

The CBK, which may look at transactions going through commercial banks to determine their validity, got curious about the large amounts of money being moved from NYS coffers, just two months to the end of the financial year.

Most of these firms that won tenders had similar directors among them and some are accused of importing food to supply to the NYS, thus going against the push to buy from Kenya.

One company was paid paid Sh40 million in mid-May to supply powdered milk.

Another received nearly the same amount for consultancy services. About Sh38 million was paid to a firm to supply rice, another got Sh13 million to provide sugar, while a media company received Sh165 million for running promotional campaigns for the NYS.