Official grilled on 'illegal' registration of firm in NYS saga

Thursday July 14 2016

Josephine Kabura appears before a Nairobi court on June 24, 2016 regarding a case in which she was charged with money laundering arising from the theft of funds from the National Youth Service. PHOTO | PAUL WAWERU | NATION MEDIA GROUP


A company that was paid part of the Sh791 million looted from the National Youth Service was not registered in the accounting system, MPs heard Thursday.

The National Assembly’s Public Accounts Committee was told that a senior clerk at the Treasury, Fredrick Musembi, registered the company in the Integrated Financial Management Information System later.

The company is among three suppliers that were irregularly paid hundreds of millions of shillings in the youth service scandal.

All the companies — Form Home Builders, Roof and All Trading, and Reinforced Concrete Technologies — belonged to one individual. They opened accounts on the same day at the same bank and branch, raising questions about how they won the supply tender.

Mr Musembi told the committee that two of the companies were registered two days before they were paid part of the Sh791 million loot.

The financial management system, introduced by the government to stem corruption in public procurement, was used to steal huge sums of taxpayers’ money.


Going by reports, lost funds could have amounted to over Sh1 billion.

Balambala MP Abdikadir Aden said the system was a floodgate of graft as there appeared to be no safeguards to ensure the data entered, which allows companies to get payment from the government, was credible.

“It appears one can register a company and fake the signature of the head of accounting of a ministry or government department. And all you do, on receiving such a letter, is to key in the details and the company would be allowed to conduct business with government,” he said.

Mr Musembi told the committee he received thousands of letters from chief accountants at ministries requesting him to register companies to allow them to conduct business with the government and get paid through the system.


He said he did not check the authenticity of the signatures on the letters, and although he reported to the system director, he admitted his boss was not aware of the letter that reportedly authorised him to register the companies.

“The letters are dropped at the reception and forwarded to my office. My work is to key in the relevant data in the letters,” he said.

Mathioya MP Clement Wambugu questioned Mr Musembi’s entry of “two categories of data” into the online system after it emerged he went beyond what he was supposed to enter, including the company name and PIN (personal identification number).

The MPs further questioned his entry of information such as postal address and bank account details, which had been left blank in the letter authorising him to register the companies from the chief accountant at the NYS, Naftali Githinji.

Apart from the fact that he filled “site details of suppliers” that were supposed to be filled by ministries and other government agencies requesting their suppliers to be registered, there were questions as to the source of the “additional data” he entered, and why he chose to go beyond his mandate.