Auditor tasks Lands ministry to explain Sh19.5b legal costs

Auditor General Nancy Gathungu has accused the State department for Lands and Physical Planning for having unsupported legal costs worth Sh19.5 billion.

In her report for the year ending June 2023, Gathungu regretted that some of the outstanding legal costs have been pending for more than two financial years and the State Department did not explain the delays in payments.

The auditor raised concerns that the status of one court case with an award of Sh711,588,204 was not supported by the case files.

Although management explained that the award amount had been paid by the Ministry of Roads and Transport, she regretted that no evidence was provided to support this fact.

Reads the report: “In the circumstances, the accuracy and regularity of contingent liabilities balance of Sh19,543,057,083 could not be confirmed.”

Gathungu has also fingered the department for failing to settle a decree issued by the court that led to accrued interests that could have been avoided.

This is after the court on September 25, 2015 ordered the State department to pay decretal sum of Sh240,000,000 for Malindi land case No.120 but the State Department delayed payment resulting in accrued interest amounting to Sh57,565,282 which could have been avoided had Management made payments as and when they were due.

Irregular charge

Adds the report: “In the circumstances, the accrued interest is an irregular charge to public funds.”

The pending bills of the department, the report shows amounts to Sh627.9 billion which were in the year under review but were carried forward to 2023/24 financial year yet the management did not explain why the bills were not settled during the year when they occurred.

Reads the report: “Failure to settle the bills during the year to which they relate distorts the financial statements and adversely affects the budgetary provisions for the subsequent year as they form a first charge.” The move comes at a time when the State Law Office said that the government owes Kenyans a whopping Sh809 billion in unpaid court awards.

Political detainees

Out of this includes over Sh1 billion owed to former political detainees. Among persons owed the cash include the family of multi-party hero Kenneth Matiba (above)which is still waiting for compensation that has risen to over Sh1 billion.

The one-time opposition leader who died was awarded Sh945 million for his unlawful detention in the early 1990s and collapsed business empire as well as interest dating from the suit was filed in 2014.

Also owed money by the State is Matiba’s colleague in the struggle for the second liberation, Charles Rubia, who was awarded Sh26 million for the suffering he endured at the hands of the Kanu regime under the late President Moi for his role in the struggle.

Rubia, who died aged 95 in 2019, was seeking Sh40 billion compensation from the government for the suffering he underwent and business losses.

The department is also in breach of the law over use of expired contracts in payments. The report notes that a review of contract documents provided for audit, revealed that the contract for provision of clearing and forwarding services between the Kenya Postal Corporations and State Department for Lands and Physical Planning of February 3, 2020 expired on January 31, 2021 yet the department continued to rely on the expired contract in the year under review for the services and paid an amount of Sh2,784,000 for services rendered.

This is contrary to Section 149(2)(d) of the Public Finance Management Act,2012 that requires that the accounting officer shall ensure all contracts entered into by the entity are lawful and are complied with.
Adds the report: “ln the circumstances, Management was in breach of the law.”

The report has also queried other matters including delays in development projects as well as issues relating to compensation to employees that had various anomalies including non-compliance with law on fiscal responsibility principal wage bill as non-compliance with the one-third of basic salary rule
Principal wage bill

On non-compliance with law on fiscal responsibility principal wage bill, the report shows that the department reported total exchequer receipts of Sh4.2 billion out of which, an amount of Sh2.5 billion or 600 per cent was spent on compensation of employee’s which is contrary to Regulations (2) of Public Finance Management Regulations, 2015 which requires that compensation of employees (including benefits and allowances) not to exceed 35 per cent of the National Government’s equitable share of the revenue.

On non-compliance with the one-third of basic salary rule, the report shows that the sampled monthly payrolls revealed that one hundred and 65 employees were earning salaries below the recommended one third of their basic salary contrary to Section 9(3) of the Employment Act, 2007 that requires all deductions made by an employer from the wages or salaries of his employees at any one time shall not exceed two thirds of such wages or salaries.

Reads the report: “In the circumstances, Management was in breach of the law.”

On delayed development Projects, the report regrets that while the Department entered into various development contracts for construction of lands offices in various counties.