PKF Kenya says evidence shows bond money was used for authorised purposes
The receipt and disbursement of the Sh250 billion Eurobond proceeds were above board, an audit report shows.
The audit was conducted by PKF Kenya who won the bid to audit the Eurobond.
The auditor says there was sufficient evidence to show the proceeds of the sovereign bond were received into the Consolidated Fund.
PKF allayed fears that the money raised from the Eurobond was misappropriated. The firm said there was evidence that the proceeds were used to pay for authorised purposes.
“There is sufficient evidence that all the proceeds of the Eurobond were either eventually received into the Consolidated Fund or paid out for authorised purposes. In addition, the National Treasury sought and received a legal opinion from the Attorney General on the matter,” reads the report.
Kenya borrowed $2 billion (Sh202 billion) from international investors in June 2014 comprising a five-year issue of $500 million (Sh50.50 billion) at an interest of 5.875 per cent and $1.5 billion (Sh151.50 billion) for 6.875 per cent to be repaid in 10 years.
It went back to the market in December of the same year for a further $750 million under similar terms, a transaction technically known as tap sale, in which $250 million went into the five-year tranche.
The report notes that although some Sh53.2 billion of the proceeds was paid directly from the offshore account towards settlement of a loan facility taken by the government, Treasury had obtained the authority to do so from the Controller of Budget.
“As per the Eurobond prospectus, the syndicated loan was to be paid from the proceeds of the Eurobond. An amount of Sh563, 201344, 900 was paid directly from the proceeds of the Euro bond offshore account,” read the report.
The loan repayment, the report says, was done directly from a receiving account in JP Morgan Chase Bank New York, rather than from the National Exchequer account, as stipulated in law.
The National Treasury appointed PFK after the office of the Auditor General said there was not enough evidence by the time they gave their opinion at the end of 2015 financial year.
In his 2015 report, Auditor General Edward Ouko said the Eurobond proceeds were banked into a special Eurobond account at the Central Bank and not directly into the National Exchequer bank account as required in law.
He said that he was unable to form an opinion with regards to the repayment of the Sh53.2 billion syndicated loan directly from the offshore account.