Kisumu Urban Project accounts frozen by DCI

Accounts for the Sh4 billion Kisumu Urban Project have been frozen as the Director of  Criminal Investigations probes the project.

The county maintains that no money has been lost; there was a mix-up but it's being rectified, the county says.

The KUP is funded by the French government through the French Development Agency.

The project includes 85 tenders for more than 20 projects to improve infrastructure in the lakeside city. It and targets roads, schools, health facilities, markets and solid waste management.

County Finance executive Nerry Achar told reporters yesterday said they didn't know that the account was frozen until they were informed by the bank that their Sh1 million cheque had bounced.

The cheque was meant to pay contractors working on city projects.

Achar explained that freezing the account followed the Sh1 billion KUP fund that was wired into a wrong account. The city manager wrote to the treasury to return it into the right account. 

Achar stated that KUP has two development accounts at DTB Kisumu branch and an operations account at KCB.

He said when the money for development was requested, the amount was wired to the operations account at KCB via the Central Bank

“The city could not pay contractors using the operations account and the city manager asked my advice on the matter, I immediately told her to write to the Treasury to wire back the money to CBK and get it to DTB Kisumu,” he said.

He said this was a  huge sum of money and different banks have different regulations, hence, it attracted the attention of authorities, including DCI, which froze the accounts and began investigation commence.

“This is normal if there is a flag raised. The first reaction of a government is to protect public funds and the first action they take is to freeze the account. It takes time to unfreeze the accounts but the matter is being handled urgently by the government," the Finance executive said.

Achar said this was the main reason DCI wrote to them about KUP, asking how the project has been going, how funds were used and how much of the projects have been done.

“Governor  Anyang’ Nyong’o decided that instead of exchanging correspondence, we go to DCI, talk to them ask them the kind of documents they want and what they need. It's the county that went, they were not summoned," he said.

Achar said he and city manager Doris Ombara, Chief Officer for Finance Angwenyi Orangi and KUP project’s chief accountant Ochieng Orwa visited the offices. They realised that the documents they wanted were generated from the project which began in 2012. DCI agreed to come to Kisumu and access the documents and physically check the projects."

He said the  DCI was not investigating any loss of money and it was a routine investigation.

Achar said the KUP money is only gets released after it’s approved by the donors and AFD and the donors direct the Treasury to release the funds.

“This money cannot be misused because all the process must go through the AFD where they have to verify everything and give Treasury a go-ahead to release funds for only what has been consumed," he added.

There were claims that contractors had stopped working due to delay in payments and will only continue with the works until they are paid.

However, Achar denied this, saying that when they realised that the account had been frozen, they met the contractors to explain what was going on. They agreed to continue working as they solve the payment issue.

“It’s not true that the contractors have stopped working," Achar said. They are working but in some areas, works have slowed down because of the relocation of water pipes by the Kisumu water and sewerage company," he said.

Last year, the financiers of the project had extended its implementation deadline as Ombara announced another two-year project extension to 2020.

The project, funded by the French government through the French Development Agency started in 2006 and was supposed to be completed in June 2016. However, delays prompted the Kisumu government to seek a two-year extension to June 2018.

Their request for another extension was accepted because the county had demonstrated commitment.