The auditor general has raised concerns over the use of more than Sh8.6 billion at the Interior ministry.
In an audit report between 2013 and 2017, Ouko said the Interior ministry has been running an illegal account bank account at Kenya Commercial Bank, Moi Avenue.
The auditor said examination of the availed bank statements revealed the Interior ministry had transferred Sh8,696,113,050 to bank account No.1109896077 at Kenya Commercial Bank (KCB) Moi Avenue Branch between June 2013 and January 2017.
Ouko said despite these massive transactions, the Fred Matiang'i-led ministry did not disclose the account.
“The Ministry opened and has been operating bank account No.1109896077 at KCB contrary to Section 28(1) of the Public Finance Management Act, 2012 which requires authority of the National Treasury to open and operate bank accounts,” he said.
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Ouko added, “The Ministry does not maintain a cash book, bank reconciliations and related payment records in support of cash transfers and withdrawals from the account, contrary to Regulations 90 and 104 of the Public Finance Management (National Government) Regulations, 2015”.
Ouko said it had been established that the ministry’s financial statements for the year ending June 30, 2016 did not disclose the balance in the said account.
Procurement of Twin Turbine Engine VIP Carrier Helicopter at Sh2.2 billion
Ouko said although tendering and contract documents for the VIP helicopter were not availed for audit review, the ministry explained that the purchase of helicopter was classified.
“Although the entire contract sum of Sh2,276,740,840 has so far been paid through a Letter of Credit, the State Department has only availed Payment Voucher No. 328 dated 30 June 2016 for Sh683,022,252, being 30 per cent of the contract sum,” Ouko noted.
Helicopter accident
The audit report further indicates that examination of records showed that Augusta Westland AW-139 Helicopter (5Y-NPS) was registered on 26 April 2016 and crashed on 08 September 2016 at a time when the helicopter should have been under warranty.
He said further investigations could not be carried out on the loss arising from the accident as required.
The report said in the absence of the accident report, it is not possible to categorise the loss of helicopter in terms of natural cause; technical or pilot’s error, the basis upon which the loss could be recovered.
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“No explanation has been given for failure to release the accident report by the Cabinet Secretary in accordance with Regulation 18(1) of Civil Aviation (Aircraft Accident and Incident Investigation) Regulation 2013,” he said.
The report indicates Interior ministry confirmed that the Helicopter was not insured just like any other Government Equipment which further complicates the recovery of the loss totaling Sh2,276,740,840.
“The Ministry has further confirmed that the helicopter did not have a warranty as a unit but parts such as avionics had,” read part of the report.
The report said failure to avail required warranties for avionics makes it impossible to determine whether the helicopter was new or refurbished.
The Ministry also failed to give details of avionics parts purportedly under warranty or give reasons for failure by the manufacturer to compensate lost parts under warranty.
Irregular procurement of footwear worth Sh267,876,000
Ouko said an examination of the approved Procurement Plan for the 2014-15 financial year showed that 26,500 pairs of footwear were approved for purchase.
He said the details disclosed on payment vouchers however indicated that 78,000 pairs of footwear valued at Sh267,876,000 were supplied and paid for.
“It is therefore evident that 51,500 pairs of footwear valued at Sh175,893,000 were purchased and paid in excess of the approved quantity contrary to Section 51(3) of the Public Finance Management Regulations, 2015 which requires commitments of expenditures to be consistent with approved procurement plan for the entity,” he said.
The Interior Ministry in their defense explained that the procurement of additional pairs of shoes was necessitated by recruitment of 10,000 more police trainees.
“However, verifications show that 4,000 trainees were at Kenya Police Training College in Kiganjo and 2,000 trainees were at General Service Unit while the procurement of additional 4,000 footwear for the Administration Police officers was undertaken and paid for separately,” Ouko said.
The audit report further notes some fictitious entry in stores records where by the information disclosed on stores ledger and stock control for shoes had been falsified as the same card number discloses different information on April 19, 2016 and May 31, 2017.
In addition, Ouko said examination of some stores card numbers reflected unexplained increase of 5,000 and 2,000 pairs of footwear respectively, whose source of receipts had not been indicated or explained.
“A reconciliation undertaken on sample basis for 12 Police Divisions across the country show that 454 pairs of foot wear were ordered and 63 pairs were issued while the record at Police Quarter Master in Nairobi is falsified to indicate that 392 pairs of footwear were issued,” he said.
Further, examination of records showed that 57 police field units had requested for 12,852 pairs of foot wears and they were issued with 3,763 pairs resulting in a shortfall of 9,089 pairs that were not available in the store.
Ouko said a physical check of the condition of shoes being used by the police across the country revealed a pathetic and unpleasant situation as some officers use wornout shoes while others have opted to buy shoes from various vendors.
“This action contravenes Chapter 37 Section 7(i) and 19(i) on dress regulations for police officers under standing orders which require all police officers to be in uniform,” he said.
Irregular Procurement of Chinese Motor Cycles
According to the report, examination of records relating to the procurement of motor cycles at a total cost of Sh866,200,000 showed that the purchase was not included in the Approved Procurement Plan for the Financial Year 2015/2016, contrary to Regulations 51(3), (5) and (6) of the Public Finance Management (National Government) Regulations, 2015.
The report indicates that examination of records showed that a supplier was paid Sh866,200,000 for the delivery of 4,420 motor cycles.
However, the procurement was based on expired supplies branch tender no. SB/18/2013/2014-Supply of Motor cycles which is not provided for in the Public Procurement and Asset Disposal Act, 2015.
In the report, Ouko said records indicated that 5 out of 7 prequalified suppliers were contracted through the expired tender to supply 2420 Chinese assembled motorcycles (181-200cc).
“However, the State Department has not justified the basis for procuring the motorcycles at a unit rate of Kshs.210,000 instead of the lowest evaluated bidder’s rate of Sh161,733 a unit, resulting in a loss of Sh116,806,140,” Ouko noted.
Ouko said the State Department further procured another 2,000 Chinese assembled motorcycles (151-180cc) at a unit rate of Sh179,000 instead of the lowest bidder’s rate of Sh150,000 resulting in a loss of Sh58 million.
“The State Department, therefore, paid a total of Sh174,806,140 in excess of the prevailing market price contrary to Regulation 10(2)(e) of the Public Procurement and Disposal Regulations, 2006,” he said.
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Ouko said although, these motorcycles were verified and found to exist, challenges relating to maintenance due to lack of spares and failure to provide helmets were observed.
“In the above circumstances, the value of Sh174,806,140 paid in excess of prevailing market price could not be confirmed as required under Section 68(1)(b) of Public Finance Management Act, 2012,” he added.
Irregular use of Letters of Credit
Examination of available records showed that 43 LCs valued at Sh8,696,113,050 were paid through the account by the State Department for Interior.
Ouko said the bank statements availed for audit however reflected only one payment of LC amounting to Sh90,225,000.
“In this regard therefore, the Ministry and the bank have not clarified how the other 42 LCs valued at Sh8,605,888,050 were discharged,” he said.
Incomplete Bank Statements
Ouko said a look at the payment vouchers showed that the State Department transferred Sh339,982,351 on 30 June 2015 to the said account but the bank statement made available for audit did not reflect receipt of this amount, an indication that the statement is neither authentic nor complete.
Mismanagement of bail cash
Ouko said another review of controls in place for management of cash bails in 5 police stations revealed that a total of Sh6,288,000 was collected but not surrendered.
The Auditor said Mombasa did not surrender Sh1,159,000, Kilimani failed to surrender Sh1,266,000 while Kasarani stuck with Sh3,863,000
He said there were no miscellaneous receipts to show that the cash had been surrendered to Police Headquarters as required under Section 51 (i)(c) of the Kenya Police Standing Orders (2002).
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The cash was also not availed for cash survey.
“In addition, Some Sh205,000 and Sh1,437,000, in respect of un-refunded and unfortified cash bails was not surrendered and was being held by Base Commander in Siaya and Pangani OCS contrary to Sections 51(1)(c) and 49(9) Kenya Police Standing Orders 2002,” Ouko said.
Lost cash bail books
In addition, records maintained at Kenya Police Headquarters, Nairobi indicate that 10 Cash Bail Books were issued to OCPD Mombasa but the same books were not availed during an audit verification exercise carried out on 24 August 2016 and therefore, their existence and usage could not be ascertained.
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