With these agencies on board, NYS probe can dig up Ifmis dirt

Full details on the latest investigations into how crooks siphoned out billions of shillings from the National Youth Service coffers are yet to come through.

I hope that the fresh investigations will go to the bottom of perennial scams at the NYS. Bringing in multiple agencies — including the National Intelligence Service, the Financial Reporting Centre and the Assets Recovery Agency — in the investigations is a good starting point.

I have always felt that one of the reasons high-profile investigations of the type under way at the NYS have not been successful is that we have not been taking full advantage of the information and statistics gathered regularly by that little-known entity called FRC.

The law obliges commercial banks to report all transactions of Sh1 million and above to the centre on a daily basis.

MONEY LAUNDERING

The former department of the Central Bank of Kenya, now an autonomous agency of the National Treasury, is your first port of call when investigating money laundering and any other suspicious transaction in the financial system.

Still, where these investigations are likely to come up with spectacular revelations is delving deeply into information that sits within the Integrated Financial Management System (Ifmis) — the ICT platform on which all public finances run.

The truth is, our ‘cowboys’ had mastered the game of exploiting loopholes within Ifmis to steal billions of shillings from the NYS. If you want to understand how these masters of deception play their game, your starting point must be a special audit by the Auditor-General.

FAKE CONTRACT DOCUMENTS

The audit, done last year, revealed sensational details of how crooks would abuse user access controls to fill Ifmis with fake contract documents and approvals. We saw how crafty civil servants accessed Ifmis from any location — even outside office hours.

The report also revealed that employees who had long left the NYS were still ‘accessing’ Ifmis and manipulating the information in the system — because it did not have transparent procedures of terminating user profiles.

Another major finding was that the companies that benefitted from the Ifmis-generated payments were mainly relatively new outfits with no internet presence, low turnover and with bank accounts that had zero balances before they received the money.

RECEIVING BILLIONS

Does it really surprise anyone that the companies involved in the new investigations are also nondescripts?

According to a report in the Daily Nation on Monday, companies that were receiving billions from the NYS carried names such as JerryCathy Ltd, Calabash Investments, Ngiwako Enterprises, Annwaw Investments and Firstlings Supplies Ltd.

Despite the NYS having its own defined Ifmis complete with a list of approved users based at its headquarters in Ruaraka, crooks were accessing it from anywhere.

The audit recounted how civil servants would log into Ifmis even on Saturdays when government offices are closed.

And, there was the sensational example of an employee of the Ifmis department at the Treasury — one Fredrick Munge Musengi — who was found to have irregularly introduced the names of dozens of suppliers into the system despite that he was not a Devolution ministry employee.

CORRUPTION

Clearly — and as the audit revealed — the NYS’s systems are vulnerable to corruption.

A crooked public official with powerful access rights in Ifmis can create a fake supplier in the system, corruptly force a fake LPO (local purchase order) into the system, corruptly create what is referred to as a goods-received note, corruptly process invoices and, finally, corruptly pay the fake supplier.

Another area where the new investigation on the NYS needs to look at keenly is the entity known as Supplies Branch Department. As reported in the Nation, all of the contracts came from here.

We must not forget that almost all the fake LPOs presented by companies belonging to the key player in last year’s NYS scandal — Ms Josephine Kabura — originated from this department.

PUBLIC TENDERS

Historically, the mandate of the Supplies Branch was to procure — on behalf of all government departments — all common user goods and services such as stationery, computers, vehicles, uniforms, cars and car batteries.

The system allows you to circumvent having to participate in public tenders floated by specific ministries.

In the old days, the department even operated and owned several warehouses, where it stored heaps of common user goods. That allowed the government to exploit economies of scale and enjoy savings from bulk discounts.

Today, the branch operates more or less like a shadowy parallel system, where crafty suppliers who want to circumvent the mainstream procurement systems go. It has no budget to buy stocks. It should be scrapped.

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