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Auditor General Nancy Gathungu has fingered the management of Kenya Ports Authority (KPA) over its failure to account for billions of shillings advanced to the authority.

In her latest report for the year ending June 2022, Gathungu claimed that the Authority did not provide documents and evidence to back various expenditures incurred by the institution.

“I have audited the accompanying financial statements of Kenya Ports Authority (KPA) set out in pages 82 to 151, which comprises the statement of profit or loss and other comprehensive income statement of changes in equity, statement of cash flows and the statement of comparison of budget and actual amounts for the year ended,” reads the report.

In the report tabled in the National Assembly, the auditor general raised a number of queries ranging from Stevedoring and Wharfage collection amounting to Sh 30 billion, unsupported hiring of labor and equipment amounting to Sh206 .9 million, non collection of jetty fees amounting to Sh1.1 million, unsupported material increase in insurance premiums amounting to Sh733.4 million.

Other queries include irregular procurement of consultancy services for a transaction advisor and sunk costs, engagements of same consultancy for provision of similar services, inconsistent board decisions on strategic port operations, irregular engagement of training service providers, unsupported hire of commuter services and un-procedural contract undertaking, unsupported payment of hire boat services, irregular sponsorship of bandari football club, unsupported operating expenses on cleaning services at Lamu Port, as well as irregular procurement of air tickets for volleyball team to Tunisia.

With regards to stevedoring and wharfage collection amounting to Sh30 billion, the report says that a review of records and information provided revealed that one company had built a conveyor belt  from the quay side that conveys the bulk cargo straight from the vessel to the company’s premises without landing on the quay side or being handled by the Kenya Ports Authority.

“Management indicated that the billing for stevedoring and wharfage is based on manifested quantities. However, landed cargo varies in many instances with the manifested quantities as an industrial practice to cover for the losses that may result from the handling of the cargo and to cushion the consignee from losses.

However, the charged stevedoring and wharfage amounts, based on declared manifest quantities, exposed the authority to possible losses. Management did not explain why the Authority had not installed meters for assurance purposes and confirmation of actual quantities delivered for charging of the stevedoring and wharfage fees,” reads the report

With regards to unsupported hiring of labor and equipment amounting to Sh 206 .9, the report shows that the amount was not supported by details of when the labour and equipment were released and when the operation was completed to verify the duration billable.

On collection of Jetty Fees, the report shows that a review of records provided for audit, revealed that there were eighty- two private commercial facilities along the Kenyan coastline as per a survey report of 2019 yet the Authority did not provide evidence of billing or sending demand notes to sixty-five (65) of the facilities for jetty fees as required by Clauses 9.1 and 9.2 of the Authority’s tariffs. “Out of the seventeen (17) demand notes issued for Sh3, 346,372, eight with jetty fee of Sh2, 662,958 did not respond and the same was not billed or captured as debtors,” adds the report.

With regards to material increase in insurance premiums amounting to Sh 733.4 million, the report shows that the increase was because of absorption of the Kenya Ferry Services Limited (KFS) operations (Ferries) and acquisition of additional assets by the Authority during the year under review.

However, according to the report, an audit review of the KFS previous years’ audited financial statements indicated total insurance costs for the Ferries as Sh120,920,000 while payment for the year as reported by the Authority was Sh131,126,032.

“In the circumstances, the validity of increases in insurance premium cost of Kshs.242, 793,000 for the year ended 30 June, 2022 could not be confirmed,” adds the report.

On procurement of consultancy services for a transaction advisor and sunk costs, the report shows that the authority had entered into a simulate contract for consultancy for transaction advisory services for the operation of the first three berths at Lamu Port and related developments.

On hiring of Commuter Bus Services amounting to Sh165.8 million, out of which an amount of Sh 25.1 million relates to commuter bus service for Nairobi and Naivasha inland container depots, the report shows that although service contract dated 26 March, 2021 indicated that payment would be made once certification of work done, confirmed and approved by the delegated supervisor, the Management confirmed and approved bus worksheets for five  months, leaving out seven months for which Sh 14.7 million was paid at a rate of Sh 2,093,100 per month.

“In the circumstances, the accuracy and occurrence of hire of commuter bus service of Kshs.14, 651,700 for the year ended 30 June, 2022 could not be confirmed,” adds the report.

On Payment for Hire of Boat Services amounting to Sh 6.2 million in respect to the provision of boat services for the Authority’s Lamu Port staff for the months of July, August and September, 2021, the report shows that the payment was not supported by requisition of services, purpose, route and number of trips taken, rate for each of the servicers provided and evidence of confirmation and approval of services rendered before payment.

Further, details on how the service provider was identified, selected, rates for services determined and engaged through a formal contract, which was done in February 2022 were not provided.
“In the circumstances, the accuracy, propriety, occurrence and value for money for boat services of Kshs.6, 230,551 could not be confirmed,” reads the report.

On Sponsorship of Bandari Football Club amounting to Sh 148.4 million, the report notes that the management did not provide a Memorandum of Understanding between the Authority and the Club.

On procurement of air tickets for the volleyball team to Tunisia which the authority paid Sh 2.9 million to an international airline to enable the team participate in the 2022 Men’s Africa club Championships, the report notes that although the procurement was done using direct procurement there was no official documentation on how the airline was engaged.