Auditor General: Procurement of Sh100m Ifmis tool was transparent

Saturday January 14 2017

Auditor-General Edward Ouko. Anti-graft detectives want Auditor General charged over loss of funds. PHOTO | FILE | NATION MEDIA GROUP


The Auditor-General has defended the procurement of a software to audit financial transactions using the Integrated Financial Management Information System (Ifmis) platform.

Edward Ouko, in a statement, maintained that the procurement of the Audit Vault system at Sh100 million was done in a transparent manner.

“With the increase in scope of the mandate of the Auditor-General and to ensure that OAG has capacity to get real time information on financial transactions, there was the need to invest in the Audit Vault. We believe that the use of the Audit Vault has helped expose and arrest the wanton misappropriation of public resources,” Mr Ouko said.

The Ethics and Anti-Corruption Commission (EACC) has recommended the prosecution of Mr Ouko and his former deputy Stephen Kinuthia for their role in what it terms irregular procurement of the Audit Vault software in exchange for kickbacks running into millions of shillings.

The anti-graft watchdog wants Mr Ouko charged with abuse of office and wilful failure to comply with procurement laws while Mr Kinuthia is to face several counts including abuse of office, willful failure to comply with procurement laws, dealing with suspect property and acquisition of proceeds of crime.
The final decision now rests with the Director of Public Prosecutions (DPP) who, according to the law, can either decide to prosecute the duo, recommend further investigations or order the file closed due to lack of sufficient evidence to sustain prosecutions. Documents seen by the Sunday Nation show that he received the EACC report on January 3.

In the statement, Mr Ouko defended his office against claims that the software was both overpriced and single sourced. He gave a breakdown of the Sh100 million that was used to procure the system showing that Sh74 million catered for the cost of the Oracle licence, Sh15 million on Oracle annual support costs, Sh6.5 million on the first instalment of the system’s implementation fees and Sh3.5 million on Value Added Tax.



“In simple terms, Ifmis is an Oracle-based system. On the other hand, the Audit Vault is an Oracle prescribed tool for auditing Ifmis. Therefore, it is given that Ifmis can only be audited by the Audit Vault,” he argued.

Mr Ouko also maintained that the new system had helped to detect the Sh791 million scandal at the National Youth Service (NYS) in 2015.

“The special audit carried out at the National Youth Service (NYS) was successful because the Audit Vault enabled staff working on the assignment to get a dashboard view of all transactions and instruments in flagging suspicious payments to the tune of Sh800 million,” he stated.

EACC, in its investigation report, had accused the Auditor-General of single sourcing the software when there were several other companies locally and abroad that could offer the same software.

The EACC says it has sufficient proof that the duo alongside others engaged in corruption, abuse of office and committed economic crimes in the procurement of the system and should be charged as such.

The EACC investigations, if proved, are bound to damage the credibility of one of the institutions specially established under the Constitution to eliminate corruption and wastage in the use of public resources.


But EACC states that it did not establish any suspicious transactions after investigating the bank account of Mr Ouko, whom it refers to as E1 in the brief.

“Upon scrutiny of the account held by E1, no suspicious transactions were noted in relation to this particular procurement.

However, the investigating officer will endeavour to obtain any other bank statement operated by E1,” the brief notes. 

“After careful evaluation of the evidence obtained in the investigations, it is the considered opinion of the Commission that various officers in the OAG were culpable for the many infractions in this particular procurement and therefore should be charged.

There is also evidence to prove that there was a conspiracy between OSI Kenya and officials of the OAG to fraudulently acquire public funds,” says the brief.

The EACC report accuses top officers at the Auditor General’s office of conspiring to overlook tendering procedures and literally handpicking the software supplier, awarding the tender and paying the entire contract sum of Sh100 million.

It however details how immediately after receiving the Sh100 million contract sum, OSI Kenya quickly wired Sh36 million to a law firm which in turn transferred it to Mr Kinuthia’s account or bought property on behalf of his sons and daughter.

Also recommended for prosecution include deputy auditor general Justus Ongera, and several directors of OSI Kenya.