Former Nairobi Governor Evans Kidero’s administration may have cost the city more than Sh21 billion through unrecorded payments to creditors, an audit report shows.
Kidero said he had not seen the report and had not been contacted about the matters in the report. Therefore, he could not comment.
Former Nairobi Finance CEC Gregory Mwakanongo said: "I have no recollection of any queries and of any audit being undertaken by KPMG. I have not interacted or been asked to respond to any KPMG staff on any queries."
The KPMG’s audit report on City Hall’s debts, revenue and cash balances shows failure by Kidero’s administration to record the payments means it is difficult to verify who was paid for what services, or if the services were delivered at all.
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The audit firm also analysed the handover report that Kidero presented to Governor Mike Sonko when he took over in August last year.
The audit report further states the former governor’s administration deleted 7,346 manual revenue collection receipt booklets from City Hall’s digital system.
The deletion means it is impossible to know whether City Hall collected money from the transactions. It also makes it difficult to accurately calculate how much Nairobi is owed by debtors.
"At least Sh21.89 billion payments were not recorded so we cannot know who was paid," the report reads.
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KPMG says Kidero’s handover report under-declared the county’s debts by more than Sh1.5 billion.
"We found Sh1.5 billion more pending bills, when we checked in individual departments, different from what was in the handover report. This means the liability is more," head of risk consulting Brian DeSouza said.
KPMG sampled 60 pending bills amounting to Sh2.54 billion during the probe. It found that supporting documents for 14 transactions amounting to Sh1.1 billion were not provided.
In 23 out of 46 sampled transactions, there was no proof of delivery by the suppliers or acknowledgement by the county government.
Sonko in January moved to the High Court seeking an order to temporarily bar creditors from pursuing City Hall and its officials over Sh58 billion debts, until his administration probes the credibility of its liabilities.
KPMG’s report adds Nairobi may have lost Sh1.6 billion in land rates in 1,892 irregular adjustments in the Local Authority Integrated Financial Operations Management System.
The advisory firm’s probe also found that Kidero’s administration irregularly operated 32 bank accounts, 13 of which were not made known in the former governor’s handover report given to Sonko last year.
Five of the bank accounts had more than Sh120 million shillings in deposits during KPMG’s audit. The advisory firm says six banks that held the accounts declined to respond to its queries.
The audit has also found that Sh22.8 billion in tax, pension and other statutory obligations was not remitted to various authorities despite being deducted. City Hall also omitted 110 vehicles from its assets list, while ushering in Sonko.
Sonko was flanked by Lands executive Charles Kerich, Danvas Makori (Finance), Mohamed Dagane (Roads) and Hitam Majevda (Health) in a meeting with KPMG officials who presented the findings to him last week.
The governor said action will be taken against any individual found responsible for unexplainable losses.
Kerich, who previously was the executive member for ICT and took over the Lands docket after the recent shuffle, said much needs to be done to safeguard public money. KPMG will handover the report to Sonko next week.
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