Gathungu flags Sh20 billion irregular spending at City Hall

Auditor General Nancy Gathungu has flagged more than Sh20 billion irregular and questionable expenditures in Nairobi government.

She revealed what appears to be systemic failure by the county to account for spending in the report that lifts the lid on what could be a massive financial rot at City Hall.

In the report, the Governor Johnson Sakaja-led administration failed to explain several expenditures, irregular procurements and double payments.

The financial audit report for Nairobi City County Executive for the period that ended June 30 last year was tabled in the Senate last week.

Gathungu also exposed rot in the county’s payroll, with some employees sharing bank account numbers and double payment of salaries and allowances.

“Review of the payroll for the period revealed that three employees shared one bank account,” the report says.

It says four employees were active in the payroll without pay.

Further, the county lost Sh15.42 million paid twice to some 178 county officers as allowances.

The county also paid more than Sh100 million to 459 employees for allowances that could not be determined in what could have led to loss of public money.

This is even as the county chokes in more than Sh100 billion debt, including Sh20 billion for legal fees owed to 132 advocates and several stalled projects worth Sh1.36 billion.

“In the circumstances, for the county to pay the 132 advocates, it would mean that the county will need to collect own source of revenue for a period of two years without providing any services to the public,” the report says.

The stalled projects include the construction and equipping of Pumwani Lucky Summer Dispensary, Pumwani Majengo Health Centre and Gumba-Mabatini Dispensary.

“Despite the failure to complete the projects, the same contractor was awarded another contract for the construction works at Mama Lucy Kibaki Hospital Phase II at a contract sum of Sh344.10 million,” the report says.

Reacting to the report, Sakaja said it depicts the rot that was at City Hall and his administration has been fixing the problems.

“Legal fees for instance, I had to form a task force to tell us exactly what we owe. Things were bad. But we are fixing them,” the governor told the Star.

Gathungu revealed that the county could not be in charge of the automated revenue collection system – Nairobi Pay, triggering fears of huge losses of own source of revenue by the county.

“No records were provided for audit to show how the county engaged the vendor and the terms of service delivery which exposed the county to possible information confidentiality breach, integrity and availability of the system for service delivery,” the report says.

The Auditor General flagged massive irregularities in the acquisition of assets worth in excess of Sh566.97 million.

The report shows that payment vouchers in respect of construction of roads and civil works totaling Sh566.97 million provided for audit revealed had various gaps.

They include noncompliance with procurement law, unsupported or failure to attack relevant documents in support of payments, delayed and stalled projects.

“In the circumstances, the value for money on the funds used in the projects could not be confirmed,” the report shows.

Gathungu questioned some Sh620.61 million transferred to the defunct Nairobi Metropolitan Services.

“However, no documentation was provided to confirm the outstanding payments under NMS were transferred to the county and approved for payments appropriately," she says.

Further, the report cast doubt on payments amounting to Sh163.69 million.

The payments could not be traced to bank statements.

They were also not supported with a register or ledger for the account numbers being billed and subsequently paid for were not supported with invoices and bills to authenticate the payment.

In addition, the county paid Sh60.86 million for delivery of goods such as flood lights and drainage materials.

However, the payments could not be traced to the stores records during stores inspection carried out on October 4 last year at the electrical stores along Ladhies Road and materials stores along Nanyuki Road.

“In the circumstances, the accuracy, completeness and regularity of the payments amounting to Sh60.86 million could not be confirmed,” the report states.

The auditor also flagged irregular procurements at City Hall.

They include irregular payment of Sh4.04 million which was paid for repairs and maintenance of motor vehicles without a procurement plan and requisition from the user department.

Others are irregular procurement of firefighting motor vehicle tyres at the cost of Sh7.05 million and purchase of oil and lubricants at the cost of Sh7.37 million, which were not supported with documents such as vouchers.

Gathungu also flagged irregular procurement of Sh14.75 million of construction materials as well as well procurement of vehicles and other transport equipment at a cost of Sh100 million.

“The procurement documents and supporting payments vouchers together with the log books for motor vehicles have not been provided for audit confirmation,” the report shows.

Some of the tenders were dished out to contractors through restricted tendering. They include Sh344.10 million contract awarded to a firm for construction of Mama Lucy Kibaki Hospital Phase 2.

Other irregular procurement of consultancy services art at a cost of Sh20 million and garbage collection services at a cost of Sh154.87 million.

The auditor also flagged double payment of Sh60 million for security services to the ECDE and other county public centers.

The auditor also exposed the rot in the management of executive scholarships and war bursaries amounting to Sh690.87 million.

The report shows that 47 beneficiaries with a disbursement total Sh2.50 million came from counties other than Nairobi County while 25 others with a total disbursement of Sh1.16 million came from private primary schools.

“In addition, analysis of data provided in support of disbursements indicated cases of issuance of both scholarships and ward bursaries to 683 beneficiaries totaling Sh32.03 million,” the report shows.