alexa Probe into Sh9bn NYS scandal claims first victims - Daily Nation

Probe into Sh9bn NYS scandal claims first victims

Saturday May 19 2018

Lilian Mbogo-Omollo, Richard Ndubai

Public Service PS Lilian Mbogo-Omollo (left) speaks with NYS Director-General Richard Ndubai on February 17, 2017. The two officers stepped aside on May 18, 2018 to allow investigations into possible loss of funds at the NYS. PHOTO | FILE | NATION MEDIA GROUP 

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The two public officers who were in charge when the National Youth Service (NYS) was hit by a Sh10.5 billion scandal have stepped aside to pave way for investigations into the loss of billions of shillings of taxpayers money.

Yesterday, President Uhuru Kenyatta also directed all those implicated to uphold the code of ethics and integrity and also step aside. This can only mean that officers higher up in the ranks could come under pressure to step down.

A statement from State House said that the President had accepted the decision by the two officials — Ms Lilian Mbogo-Omollo and Mr Richard Ndubai — to leave office for three months to pave way for the investigations by the Directorate of Criminal Investigations (DCI). Ms Mbogo-Omollo is the Principal Secretary in the Ministry of Public Service and Youth Affairs, while Mr Ndubai is the NYS Director General.


According to documents seen by the Nation, the bulk of the money — Sh6.1 billion — was lost between September 2016 and August 2017. A private company, Firstling Supplies Ltd, received the lion's share of the cash, having been paid Sh1.48 billion. Another firm, Flagstone Merchants received the second highest — Sh1.03 billion.

It was not clear whether the two officers stepped aside of their own volition or they were pushed out. The dispatch from State House said: “The two officers directly responsible for the functions of NYS in the period being investigated are Ms Omollo and Mr Ndubai. This afternoon the President accepted their offer to step aside for a period of three months to allow investigating agencies to complete their work.”


The President further said he has confidence in the work of the investigating agencies and assured the country that in the event any wrongdoing is established all those involved will be prosecuted.

The statement further said the President expects any public official directly implicated in the investigations to act accordingly. This could put pressure on Health Cabinet Secretary Sicily Kariuki, who was in charge of the Youth ministry at the time.


Ms Omollo was appointed PS in the ministry at the same time as Ms Kariuki who at the time replaced Ms Anne Waiguru who had resigned from the Cabinet in the wake of the first NYS scandal.

Ms Kariuki was moved to the Health ministry when President Kenyatta named his second term Cabinet earlier this year. Ms Mbogo-Omollo retained her old docket.

The spotlight of public scrutiny is now likely to turn to Ms Kariuki and whether she will heed the President’s call for other officials to step aside.

Ms Margaret Kobia is at present the CS in charge of Youth Affairs. Yesterday, her office issued a statement saying that in her meeting with members of the National Assembly Committee on Labour and Social Welfare, she told the MPs that she had received a memo indicating that “the vouchers forward for investigation to the DCI amounted to Sh900 million.” She denied admitting that only Sh900 million had been lost.


Both Ms Omollo and Mr Ndubai are among the 41 people that the DCI has recommended be held criminally responsible for the systematic looting of NYS through a well-orchestrated scheme involving senior government officials and dubious suppliers. They were identified when the DCI began investigations late last year.

The plundering of NYS involved paying large sums of taxpayers’ money to ghost suppliers at the expense of genuine ones. Some of the ghost suppliers also received double payments through breaches in the Integrated Financial Management Information Systems (Ifmis), the system used by government to pay for goods and services.

According to some of the suppliers who requested anonymity to safeguard their relations with NYS, the ground work for the current mess started when NYS was expanded in 2013 and was involved in multiple projects across the country.


Since the top management was under pressure to complete many projects, including the Nairobi slums upgrade, procurement processes were sidestepped and merchants were asked to supply goods within a short time. Suppliers were promised that paperwork would be done later. Once goods were supplied, a merchant was only left with a delivery note showing they had indeed delivered supplies.

When the first NYS scandal hit the headlines in 2015, most of the merchants who had done genuine work had not been paid. Unscrupulous middle-level NYS officials then ensured new companies laid claim to the supplied goods and got paid, leaving out genuine suppliers holding delivery notes.

An investigation by the Nation early this week revealed that records of some of the entities believed to have been fraudulently paid Sh9 billion are incomplete or missing from the company registry.


A search in the official database of the registrar of companies showed that Ameratrade Enterprises, Ngiwako Enterprises and Ersatz Enterprises returned a “no result”.

Out of a sample of 10 companies, three were properly registered as companies with two directors each, two were registered as business names with one owner each, while three could not be traced at all at the company registry.

About 40 companies are said to have been involved in the fraud and are under investigation. In a few cases, efforts by the Nation to unmask the owners of the entities yielded identities of directors whose names are not familiar to the public, but who are possibly fronts for people holding influential public offices.