How funds are siphoned from county coffers

County government officials are on the spot over widespread corruption within the devolved units.

Ethics and Anti-Corruption Commission (EACC) deputy CEO Michael Mubea told Sunday Nation that investigations had unearthed how county leaders and officials have come up with new ways of embezzling county funds.

“First, there are those who pay for services which are not delivered. Once the companies receive the cash, they share the spoils with the county officials.

"Second, county officials are giving out businesses to proxy companies which are owned by their relatives and cronies. Third, there are increasing cases of over-valuation of tenders; and, lastly, payment of the right or inflated prices for shoddy works,” Mr Mubea says.

Ongoing investigations and cases in court have exposed the inner workings of these cartels.

Auditor-General Edward Ouko’s reports on financial accountability in counties have also exposed the underhand dealings.

DEATH PENALTY

To curb graft in counties, Senate Deputy Majority Whip Irung’u Kang’ata suggests stronger measures, which include making grand corruption a capital offence.

“Courts should also convict and jail at least one governor so that it acts as a deterrence to others. Procurement processes should also be made open by compelling procurement committees to publish their minutes to members of the public,” Mr Kang’ata says.

Kiharu MP Ndindi Nyoro calls for the hanging of corrupt individuals and wants county officials who have been accused of engaging in corruption to be suspended without pay. Some of the techniques corrupt officials use include:

One account signatory

Whereas the Public Finance Management Act of 2012 stipulates that official county government accounts should have more than one signatory, some counties have designated one individual to be a signatory.

The corrupt county officials then work with bank officials who authorise the withdrawal of funds without poking a nose on the lack of other signatories as required by law.

“Through such means, county officials are able to keep the thieving circle small and avoid anyone from questioning the spending of funds,” Mr Kang’ata says.

Paying for 'air' and sharing loot

If you are well-connected in the governor’s corridors, it is very possible to get payment for services not rendered while genuine suppliers languish in wait of payments for years.

Crafty tenderpreneurs are getting paid for work not done or for supplying air and then later distributing the loot with their benefactors from the counties.

In Homa Bay County Assembly, almost half a billion shillings was looted from 2013 to 2017 through fishy deals in which hot air was supplied in plenty.

“What happened in Homa Bay was similar to the NYS scam. But the difference is that the suspects transferred the cash through various bank accounts but finally to their personal accounts or their company accounts. The funds were traced into their accounts,” former EACC boss Halakhe Waqo said during the conclusion of investigations in March 2017.

The story goes that during the 2013 General Election, an influential bank manager funded several politicians eyeing seats in the Homa Bay County Assembly, hoping to benefit from tenders and influence employment positions.

FRAUD

True to his word, when a number of those he supported got elected to the County Assembly, the banker pitched for a proxy to become the Assembly’s clerk.

Soon after the proxy was in office, the banker — who is described in documents as the nerve centre of the scandal — opened two companies which were used to siphon funds from the devolved unit.

The EACC found out that despite getting hundreds of millions of shillings from the Homa Bay County Assembly and Executive, one of the firms was only able to account for Sh10 million of work done.

Forensic experts traced Sh41.27 million to one of the companies and Sh112 million to the other company, both owned by the banker.

In Nairobi, former Governor Evans Kidero is in court together with seven others charged with conspiracy to commit an offence of corruption, namely fraud, leading to loss of public funds in the sum of Sh213,327,300 for services not rendered.

In Mandera, Governor Ali Roba’s government is being investigated over various contracts amounting to Sh1.8 billion.

Among the contracts in question is a claim of roads that are complete on paper but which residents claim were never done.

Out-of-court settlement scams

Lawyer Assa Nyakundi says some counties are conspiring with county officials to sponsor cases in court and then seek out-of-court settlements through which hefty sums exchange hands.

For instance, between July 2015 and June 2016, Dr Kidero’s administration irregularly paid Sh480 million for legal fees and then paid Sh580,270,149 to external lawyers outside Ifmis, which is contrary to National Treasury provisions on processing such payments, according to an Auditor-General’s report.

Some of the lawyers in trouble over the alleged unsupported payments of legal fees include Prof Tom Ojienda and Borabu MP Ben Momanyi.

“Governor (Mike) Sonko is dedicated to recovering hundreds of millions of shillings that were paid irregularly to lawyers.

"So far, he has stopped further payments of over Sh100 million in unsupported legal fees, mostly from out-of-court settlements,” Mr Onchari Oyieyo, the PA and political adviser of Governor Sonko, says.

FAKE PRICING

Various reports indicate that inflating prices of tenders is among the major ways in which officials steal public money.

In July 2018, seven Bungoma county officials were found guilty of spending Sh1 million to buy 10 wheelbarrows.

In Garissa County, officials are in trouble for inflating the price of 27 used motor vehicles which were acquired at a cost of about Sh9.1 million per motor vehicle.

Although the county was to spend Sh186,360,822, officials quick to make a kill inflated the figure to Sh246,932,000, making a cool Sh60,571,178 out of it.

Fake trips and meetings

Some county officials have been creating their own events through which they requisition for allowances yet the meetings do not exist.

The officials also plan imaginary trips so as to benefit from per diems.