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Kenyans are burdened by the approximately Sh14 trillion public debt borrowed outside the budget due to failure to audit public debt against the Appropriation Act, claims a petition filed in Parliament.

The petitioner says failure to audit public expenditure against the Appropriation Act had resulted to approximately Sh794 billion in illegal pending bills.

The Auditor General is also accused of failure to comply with Article 223 of the Constitution resulting in the loss of Sh595.9 billion in ineligible supplementary expenditure.

According to the petitioner, Bernard Muchere, a fraud risk management consultant, conscious avoidance by the Auditor General to report fraud concealed under the Supplementary Budget – Price Stabilisation (subsidy) compensation, allowed the recent loss over Sh18.4 billion in the Ann Njeri saga.

Muchere has petitioned the National Assembly concerning what he claims to be failure by the office of the Auditor General headed by Nancy Gathungu to meet the constitutional threshold and criteria required under Article 229 in undertaking the special audit report on supplementary expenditures.

The petitioner states that the auditor consciously avoided addressing the real issues on the oil price stabilisation contained in the Recurrent Supplementary Expenditure Estimates I&II of the financial years 2021/22 and 2022/23 in the Ministry of Petroleum and Mining.

“The Ministry of Petroleum and Mining’s supplementary expenditures were used to siphon out billions purported to be for subsidies to unnamed Financial Private Enterprises,” reads the petition.

He further alleges that public money was stolen from the consolidated fund and Appropriations in Aid (AIA).

Muchere says that the Ministry of Petroleum and Mining’s Recurrent Supplementary estimates I&II for the financial year 2022/23 and 2021/22 were at the disposal of the Auditor General at the time of undertaking the special audit on the supplementary budget, but she consciously avoided confirming to Kenyans whether the subsidies to the unnamed Financial Private Enterprises of approximately Sh144.11 billion was lawful and effective as required of her under Article 229(6) of the Constitution.

According to Muchere, the auditor consciously avoided reporting on the diversion of the Petroleum Development Fund of Sh18 billion by the National Treasury.

He explains that the Petroleum Development Fund was established under the Petroleum Development Fund Act, of 1991 which was revised in 2012, in the Ministry of Petroleum and Mining.

Petroleum levy

The primary goal of establishing the Petroleum Development Fund was to support the country’s oil industry by utilising the levy/funds collected as a mechanism for price stabilisation during international crude oil price hikes.

Muchere explains that the Petroleum Development Levy (Amendment) Order, 2021 requires that the collector (Commissioner of Customs and Excise) shall remit to the Petroleum Development Fund under the Ministry of Petroleum and Mining all the levies paid during the month.

“Contrary to Section 3&7(c) of the Petroleum Development Levy (Amendment) Order, 2021, the National Treasury established the Petroleum Development Levy Fund (Holding) Account,” states the petition.

The Petroleum Development Levy Fund (Holding) Account was used to intercept the levy before being paid into the Petroleum Development Levy Fund in the Ministry of Petroleum and Mining.

Upon interception of the levy, the National Treasury transferred unlawfully Sh18.4 billion to the State Department of Infrastructure, the petition claims.

According to Muchere, to sanitise and appear to account for the unlawfully transferred Sh18 billion to the State Department of Infrastructure, the National Treasury prepared financial statements for the Petroleum Development Levy Fund Holding Account which was audited by the Auditor General.

“It appears the National Treasury and the Auditor General converted unlawfully Petroleum Development Levy Fund Holding Account into a national government entity to enable prepare financial statements, yet it was not established as required under Article 206(1)(a) of the Constitution,” he writes.

Special audit

After diverting the Sh18 billion intended for subsidising oil marketing companies for price stabilisation, only Sh3.2 billion was transferred to the Ministry of Petroleum and Mining, according to the Auditor’s Special Audit report tabled before parliament last financial year.

 He says the move exhausted the levy which was meant for oil price stabilisation, consequently, the Ministry resulted in the use of the consolidated fund and AIA.

Furthermore, the National Treasury unlawfully borrowed domestically approximately Sh877 billion and Sh696.4 billion in the financial years 2021/22 and 2022/23, respectively.

Muchere says the chief auditor failed to meet the constitutional threshold and criteria set under Article 229(4)&(6) of the Constitution upon which she engaged in an unconstitutional special audit of the supplementary expenditures backdating the special audit for nine financial years.

“Interestingly, the same office of the auditor general had submitted for each of the nine financial years, audited financial statements to respective accounting officers. This connotes a repetition of the audit,” he opines.

The petitioner therefore urges Parliament to establish a select committee of both Houses, the National Assembly and the Senate, to inquire on the matters raised in this petition.

The committee, he says should inquire into the failure of the Auditor General to meet the constitutional criteria and threshold as required by the Constitution.

“This will address the issue of the Auditor presenting to Kenyans incomplete audit reports that have contributed to unrestrained mismanagement of public money,” states the petition.

The incomplete audit reports have resulted to the shortchanging of county governments on revenue sharing; where due to failure by the Auditor to meet the constitutional timeline they may be getting 21.7 per cent less revenue.

The committee should establish whether the special audit of the supplementary expenditures were constitutional and whether it was necessary.

In the event, that the committee finds the audit unconstitutional and unnecessary all public money spent on the exercise should be refunded to the Kenyan people.

The Committee should establish whether the auditor General is culpable of professional negligence for failure to undertake the audit in accordance with the provisions of Article 229.