Report reveals theft of public funds in counties

Auditor General Nancy Gathungu has exposed dubious ways through which various county governments have been using to siphon hundreds of millions of shillings through dubious expenditure and financial irregularities.

In a report that almost declares most counties as crime scenes that would require the immediate arrival of officers from the Directorate of Criminal Investigations and  Ethics and Anti-Corruption Commission , the devolved units have been faulted over unexplained expenditure, irregular procurement of goods, double payment of salaries, allowances and alleged irregular payments.

As a result, the taxpayer has been losing billions of shillings through the dubious deals orchestrated by county chiefs, with the Auditor General warning that failure by authorities to take disciplinary actions against accounting officers over the financial irregularities has hardened their impunity.

In her latest report for the Financial Years 2022/23, Gathungu has revealed shocking details of how counties irregularly sourced and paid for legal services while in other cases paid staff illegal allowances as well as failed to comply with law on ethnic composition.

Retirement age

Nairobi County Government gets the biggest flak where 11 lawyers are said to have been engaged to represent it on more than 50 per cent out of the 832 cases and are to be paid a whooping Sh10.7 billion. This is more than the total county own source revenue of Sh10.56 billion.

Besides, the county could not account for Sh11,185,475,652 paid as salaries.

A scan through the report shows about nine counties namely Wajir, Marsabit, Murang’a Samburu, Uasin Gishu, Nakuru, Narok, Bomet and Kisii retained and paid salaries to employees who had attained the retirement age of 60 years.

Report further details how counties have misappropriated funds including issuing irregular tenders worth billions of shillings and other various anomalies during the procurement of goods and services.

The anomalies include non-compliance with procurement guidelines, non-compliance with law on staff ethnic diversity, irregular payment to Council of Governors (CoG) and Frontier Counties Development Council (FCDC) Limited as well as failure to remit payroll and statutory deductions.

Among the worst counties include Nairobi, Nakuru, Marsabit, Kisumu, Nyamira, Bomet, Kwale, Tana River and Lamu.

“Lack of action and sanctions has also led to fiscal indiscipline including misallocations, wastage of resources, and lack of value for money in the implementation of projects and loss of public funds, thereby impacting negatively on development programmes,” the report.

It adds: “This in turn threatens economic growth and service delivery sustainability.”

For instance, in the case of Nairobi headed by Johnson Sakaja, the report reveals that there were anomalies in provision of legal services relating to payment vouchers totalling Sh375.9 million.

Report also shows the county employed two officers on permanent and pensionable terms while their age was above 50 years while other three employees were sharing bank accounts.

Audit review

It also shows that there were four officers active in the payroll without salaries, 178 others were paid leave allowances twice amounting to Sh15. 4 million, 26 were on monthly gross pay yet they were also paid other allowances totalling Sh17.6 million.

“The allowances included basic pay, rental, house supplementation and service gratuity,” the report adds.

With respect to Nyamira, the report shows there was an over payment on purchase of vehicles by Sh1.2 million as the county indicated it spent Sh23.7 million to procure three vehicles yet a review of supporting documents including invoices showed that the vehicles were purchased at a cost of Sh7.5 million totalling to Sh22.5 million.

Report shows Kisii has unsupported expenditure on salaries and allowances totalling Sh381.3 million paid in August, 2022, yet payment vouchers in support of the salaries and allowances were not provided for audit review.

The county has also been fingered over unsupported payment to the Lake Region Economic Bloc amounting to Sh450,000 that was paid on January 16, 2023 to support the annual summit of the Lake Region Economic Bloc as supporting documents were not provided for audit.

Report further shows Sh5,000,000 was paid to CoG for the purpose of meeting its operational expenses, contrary to Section 37 of the Intergovernmental Relations Act.

Irregular payment

Migori on the other hand has been flagged over irregular payment of Sh2 million to the Lake Region Economic Bloc which was not supported by approval and also made Sh3 million irregular payment to CoG for the purpose of meeting its operation expenses.

The county has also been fingered over avoidable payment of legal fees amounting to Sh44.9 million. Report notes that the management did not provide adequate explanations for outsourcing the legal services despite having in place Office of the County Attorney of three legal officers.

With respect to Homa Bay headed by Gladys Wanga, the report raises concerns over irregular payments of Sh5.9 million to Council of Governors.

It also raises concerns over unsupported payment of legal expenses totalling to Sh38. 9 million paid to various law firms for representing the Executive in various legal disputes/court cases during the year under review.

Review of records revealed that although there are 47 court cases against County Executive, details of the court cases including the subject matter, case files, fee notes and financial implication such cases may have on the Executive were not provided for audit. Further, all the 47 suits and matters were being handled by external law firms.

“No satisfactory explanation was given as to why the legal services were outsourced,” the report adds.

On the other hand, Anyang’ Nyong’o’s Kisumu has also been flagged over unsupported legal expenses amounting to Sh44.6 million.

Legal cases

The report notes that documents such as list of pending legal cases, outstanding legal fees per case, stage of proceedings of each case, fees paid up to date per case, breakdown of legal fees in notes and evidence of court attendance, rate as per advocates remuneration roll, statements or ledgers of advocates accounts and case files showing the value of each case were not provided for review.

In Vihiga, the report raises concern over various issues including irregularities in compensation of employees, inaccuracies in insurance costs, delay in construction of governor’s and deputy’s residences, lack of Annual Human Resource Plan and Annual Recruitment Plans as well as irregularity in the construction of 206modern market stalls at Mbale township.

In Bomet, the county had unsupported legal fees amounting to Sh22.2 million relating to legal fees, arbitration and compensation payments.

County also had made irregular payment totalling Sh10,722,820 to 19 employees who had reached the mandatory retirement age of 60 years but were retained in service without justification or indication of special skills.

Kajiado headed by Joseph Ole Lenku is on the spot over unsupported casual payment, unsupported expenditure, unapproved contract extension, lack of human resources plans and inadequacies in legal expenses management and contract.

Report shows payment details maintained by the office of the County Attorney for the year under review reflects total legal expenses of Sh149 million arising from engagement of several consultants to render legal services yet various anomalies were noted.

Susan Kihika’s Nakuru has been fingered over various anomalies amounting ranging from irregular transfers to school feeding fund, unsupported donation of dry food stuff, unsupported office general supplies and services, irregularity of imprest management, irregular drilling of boreholes, irregular maintenance of Human Resource Information System as well as lack of a recruitment plan.

Governor Kimani Wamatangi’s Kiambu has been flagged over irregular cash purchases of airtime amounting to Sh5.5 million, irregular procurement using imprest totalling Sh6.3 million that was paid to five officers for repair and maintenance of motor vehicles and Sh2.2 million to various officers for procurement of toners and printing materials contrary to Regulation 91(1) of the Public Finance Management (County Governments) Regulations.

On the other hand, Muranga headed by Irungu Kang’ata is on the spot for paying staff in service after attaining mandatory retirement age.

Review of the payroll revealed that several employees with emoluments totalling Sh45,997,001 were still in service beyond the retirement age.

In Kirinyaga headed by Ann Waiguru, the report shows there was several irregular payment of salaries to staff engagement in other gainful employments.

In Machakos although several staff were promoted, a review of personal files revealed that some promotions were effected on individuals who lacked academic and professional qualifications and in general there was no approved establishment or structures and approved career progression.