• Farmers' lobby asks the DCI and EACC to ensure that the suspects pay for reducing farmers to paupers and bringing the Muhoroni economy to a standstill.
• The Auditor-General cites the malpractices as under-reporting of sales, inflation of tenders, misuse of borrowed funds, and remuneration of sacked employees.
Image: MAURICE ALAL
Cane farmers want Muhoroni Sugar Company managers arrested and prosecuted for allegedly stealing and mismanaging taxpayers' billions of shillings.
Their demand follows Auditor General Nancy Gathungu’s exposure that the management under-reported sales, inflated tenders, misused borrowed funds, defaulted on loan payments and paid sacked and retired workers.
Kenya National Federation of Sugarcane Farmers chairman Charles Anyumba asked Director of Criminal Investigations George Kinoti and Ethics and Anti-Corruption Commission chief executive Twalib Mbarak to arrest the suspects.
“We want the two agencies to arrest those involved in malpractices that have reduced farmers to paupers and brought the Muhoroni economy to a standstill,” Anyumba said.
He said the Gathungu report had validated farmers' complaints against the managers and the culprits should be punished.
Anyumba, who the Muhoroni Sugarcane Outgrowers Company chairman, said previous audits had never been released to the stakeholders.
He questioned the silence of those who have been praising the managers on radio, TV and social media after the release of the report.
He said the bane of Muhoroni involved corruption, pilferage and poor human resource capital.
“We have massive cases of conflict of interests at the company at the expense of farmers and workers. You a find a manager is a farmer, transporter and tender beneficiary.”
He decried delayed salaries and farmers' payment arrears and questioned why retirees have not been paid their dues since 2018.
“Some of the company’s heads of department are unqualified and incompetent,” he said.
The chairman said the leasing of state-owned factories should be expedited as farmers fully supported it.
The Auditor General says more than Sh1.7 billion had been lost due to under-reporting of sales.
The audit shows variances of millions of shillings between systems-generated sales figures and audited accounts every year.
In 2013-14, the difference between the income captured by the sales register and financial accounts is Sh396 million. By end of June in 2019, the variance was Sh1.7 billion.
“There was no explanation for the variances,” the audit report notes.
The parastatal, which has been under protective receivership since 2001, cannot account for Sh447.5 million loan it received in 2015 from the Sugar Directorate for factory maintenance, according to the report.
“It was established that there were no proper books maintained by the management of Muhoroni Sugar Company of either loan utilisation expenditure schedule or ledgers,” Gathungu said.
“In addition, the loan was deposited into an existing account therefore mixing up the loan with other funds and making accountability of these funds difficult.”
Gathungu exposes deeply entrenched mismanagement at the Kisumu-based miller which, she says operates under "inefficient and ineffective financial, procurement, human resource practices".
The audit indicates that even after being put under receiver managers, the company was still paying seven former managers huge salaries, hence Sh6,399,996 loss due to double payment.
The audit, which was tabled in Parliament last Thursday, shows that 87 occupants of company houses are not employees while 33 staff members had been allocated more than one house.
“It was also noted that a total of nine officers were earning house allowances and another seven officers were receiving house allowance in the periods they resided in the staff houses.”
The report indicates that three employees were appointed to positions they were not qualified for.
“A review of the personnel files for the officers in acting capacity revealed that officers were appointed to act in higher job cadres without having met the minimum requirements.”
The audit cites Evaline Ruto, who acted in the Sales and Marketing department, Gideon Angura (planning and project engineer) and Manuel Omenyo (financial accountant) as some of the officers who, despite not having the requisite qualifications, were appointed to act in senior management posts.
It states that 63 officers were paid salaries way above their job groups and recommended that a mechanism be instituted to recover the excess amounts paid.
The report further exposes the rot in the payroll where a retiree received over Sh500,000 in salary long after retiring.
In another shocking disclosure, an employee who retired in 2017 was on the payroll up to 2018 during which he received Sh501,242 irregularly.