Did taxpayers lose Sh20 billion in NYS scandal?
“That NYS alone, they stole more than Sh20 billion, not Sh1.6 billion.”
- Raila Odinga in Kakamega on June 3, 2017
In 2016, a special audit of the National Youth Service accounts by the Auditor General revealed an elaborate scheme to defraud taxpayers that led to the loss of Sh1.9 billion and an attempted theft of Sh695 million.
But the losses could have been worse than what the Auditor General uncovered, according to a report on the special audit by the parliamentary Public Accounts Committee (PAC).
The report, that was released in March this year, states that the sum which may have been misappropriated, and needs to be further investigated by the Director of Criminal Investigations (DCI) and the Ethics and Anti- Corruption Commission(EACC), may be to the tune of Sh23 billion for the entire ministry. Of that sum, slightly over Sh10 billion is directly traceable to NYS.
The committee concluded that the theft was well orchestrated and recommended that Ms Waiguru “be barred from holding public office, if found guilty after due process, in light of her overall leadership failures at the Ministry.”
It also found the then Principal Secretary, Peter Oganga Mangiti, responsible for the loss of public funds, and recommended that Mr Mangiti, Elgeyo Marakwet Senator Kipchumba Murkomen, and others involved in the scam be investigated and charged for loss public funds at NYS. The PAC also affirmed other recommendations of the Auditor General.
The audit by the Auditor General, done at the request of the clerk of the National Assembly, found that the biggest beneficiary of the scandal was Mrs Josephine Kabura Irungu, who received Sh1.3 billion on account of 11 companies. She was also meant to benefit from the attempted theft of Sh695 million.
About Sh791.4m was illegally paid for the construction of the 3.5km Kibera road, yet there was no works included in the procurement plan for the 2014/2015 fiscal year. The special audit noted that the money was fraudulently paid, between December 2014 and March 2015, to three suppliers whose site details were irregularly defined.
One of the suppliers, Form Home Builders received all its irregular payments of about Sh219 million at least five months before it was even registered by the Registrar of Companies while the other two Roof and All Trading started receiving their payments about two months after registration.
The Register of Companies confirmed that they were recognised as business names and not companies or entities and therefore it was likely that the businesses were not bound by either the Companies Act or the Registrar of Companies.
Furthermore, the proprietor of all of the three business names was Ms Josephine Kabura Irungu who received the entire amount of Sh791.4 million on the account of the three business names via their corporate bank accounts held by Family Bank Ltd.
Another Sh609 million was fraudulently paid out for alleged supply of good and services. According to the audit, inadequate controls over wage payments to youth working on NYS projects could have led to the funding of NYS operations using money held at the NYS Huduma Funds amounting to Sh55.7 million.
Participating youth made a monthly mandatory contribution of 30 per cent of their wages to the fund.
In October 2014, an AIE (authority to incur expenditure) whose value amounted to Sh70 million was issued to the NYS College in Gilgil but a year later the audit found that the money could not be traced.
The PAC report on the Auditor’s General report on NYS accounts did conclude that Sh23 billion may have been misappropriated in the Planning ministry of which almost half is directly traceable to NYS but it called for further investigation to determine the extent of the theft.
Until the investigation is completed and findings released, Mr Odinga’s allegation is unproven.