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A Senate watchdog committee has put Marsabit governor Mohamud Ali on the spot for pumping Sh60 million into a water utility firm without revealing the expenditure to the Auditor General.

Instead, the Senators want the Ethics and Anti-Corruption Commission (EACC) to investigate the devolved unit why it has been pumping money into Marsabit Water and Sewerage Company (MAWASCO) and yet they have never been audited.

Ali was taken to task over claims they concealed the subsidy for the financial years ending June 2019 and 2020 from the chief auditor.

While appearing before the Senate County Public Investment and Special Funds committee chaired by Vihiga lawmaker Godfrey Osotsi. Ali disclosed that his administration has been allocating Sh20 million annually to MAWASCO since 2018.

During the grilling, it was revealed the auditors could not flag the subsidy, as the county government did not disclose the expenditure in their financial statements for the two previous fiscal years.

Senator Ledama Olekina (Narok) sought to know how the county government allocated the funds to the water firm even though it had no board of directors in place tasked with the responsibility to incur expenditure.

“How did the county government allocate Sh20 million yearly to a company with no board?
How was the money allocated without a board, which is mandated to incur expenditure? We cannot ignore such a serious issue,” said Ole Kina.

The Senate minority whip said the governor should explain why his administration also failed to reveal the expenditure to the auditors.

“You cannot come here and tell us there are no financial records since 2018. You have to explain where the financial records are. We should not point our guns at the auditors because they only act on documents they have been provided with,” he said. The county chief told the committee that the county government decided to subsidize the company because of its limited financial and technical capacity to assume its mandate.

“We are not refusing that we should have submitted the documents. We have no defense. Going forward, we will do that. We are asking for leniency because of the reasons we have given above,” said the governor.

To remedy the situation, he said an interim board has been constituted and a new managing director for the company competitively recruited.

“A technical competent person for the purpose of financial reporting has been seconded to the company from the county government. Going forward, the issue of non-preparation of financial statements shall not occur,” he said.

Ole Kina wanted to know why the county’s Water department is running the show at the company when a new board is in place.

“What are you hiding? We want the auditor general to audit the transactions undertaken by the Water department and how they were done,” he said.

“I agree with you (Olekina). EACC should come in as the issues flagged will only attract adverse opinion from the auditor general.”

However, Ali pointed out that the company leverages on the county government through the department of Water, Environment and Natural Resources for support such as electricity costs, staff salaries for those seconded by the county government, operation and maintenance, pipeline repairs and office space, among others.

According to Ali, the water company, established in 2018, is facing several challenges including having to pump water using electricity for eight kilometres to its customers leading to high cost of power.
Further, the company depends on Bakuli dam, which is yet to be completed to guarantee self-sustenance and full operation, for its water supply.

However, for the last four years, the Bakuli reservoir almost dried up due to prolonged and recurring drought constraining water supply to the clients.

“The company has not been making profits because of the serious drought we have experienced. We were previously trying to make the company viable through the support we were giving it,” he said.
Osotsi ordered the county government to submit to the committee a CR12 of the old and new board members within a week, disclose revenue received by the company from water sales and where the money has been banked.

“You should also submit the financial statements of the company to the auditor general for audit. We will retire to make a decision on the way forward and possible offences,” said the Vihiga Senator.