SIPHONING PUBLIC COFFERS

Auditor General finds Sh35bn pending bills fake

The payment of illegal bills rekindle memories of NYS scandal

In Summary

• Ouko reveals three governors have paid Sh500 million illegal bills.

• Elgeyo Marakwet have paid a total of Sh235.4 million ineligible bills.

Auditor General Edward Ouko.
Auditor General Edward Ouko.
Image: FILE

Thirty-five billion of pending bills in counties are illegal, the auditor general has unearthed, in what may return to haunt governors in the ongoing anti-graft crackdown.

Auditor General Edward Ouko revealed that at least three governors have already irregularly paid Sh500 million for the ineligible bills, which may attract the attention of anti-corruption agencies.

President Uhuru Kenyatta’s administration has stepped up effort to pay the bills that have impoverished some contractors, who have been auctioned by financial institutions.

 
 

During the Madaraka Day celebrations on June 1, Uhuru ordered the national government and the counties to pay money owed to contractors by the end of May.

But it is turning out a huge chunk of the pending bills are fraudulent, akin to the National Youth Service scandal, where fake contractors were paid for supplying air.

In the audit exclusively obtained by the Star,  Ouko revealed that Elgeyo Marakwet county headed by Governor Alex Tolgos had already paid Sh235.4 million of the ineligible pending bills

Nairobi's Mike Sonko had already paid ShSh246.4 of the illegal bills, while Kericho county boss Paul Chepkwony had paid Sh131.7 million.

The 47 counties had by end of last financial year in June 2018 accumulated Sh108.41 billion claims from contractors and suppliers, a steep climb from Sh35.84 billion the year before, according to the office of Controller of Budget data.

Out of the Sh79.6 billion counties pending bills submitted by 41 counties for verification, Auditor General Edward Ouko reveals that only Sh43.9 billion is legible for settlement.

This means that a total of sh35.6 billion should not be paid to suppliers and contractors, raising the red flag that they could be fictitious payments manufactured to swindle taxpayers.

 
 
 

Vihiga Governor Wilberforce Otichillo, Wycliffe Oparanya (Kakamega), Kiraitu Murungi (Meru), John Nyagarama (Nyamira), Muthomi Njuki (Tharaka Nithi) and Migori's Zachary Obado did not submit their pending bills for scrutiny.

Council of Governors chairman Oparanya protested that the national government is using its arms and the legislature to manipulate governors.

"The main goal is to destroy devolution. The counties have structures in place that support accountability,” he told the Star

In the leaked Audit report, Nairobi county leads the pack with the highest ineligible pending bills at Sh11.3 billion, followed by Turkana's Josphat Nanok with Sh3.8 billion.

After irregularly paying Sh 146 million, Sonko's administration has reduced ineligible payments to Sh 11.2 billion.

Counties with irregular pending bills that should not be paid include Kiambu (Sh1.4 billion), Homa Bay (Sh1.6 billion), Kwale (Sh1.6 billion), Mombasa (Sh1.8 billion), Nakuru (Sh2 billion) and West Pokot (Sh 1.2 billion).

Others are Embu (Sh927 million), Nyandarua (Sh841 million) Laikipia (Sh911 million), Kitui (Sh870 million) Kericho (Sh604 million) and Elgeyo Marakwet with Sh683 million.

 Going forward, the National Treasury will endeavour to ensure that payments to suppliers of goods and services to the National Government are made within a maximum of 60 days.
Treasury CS Henry Rotich

Wajir Governor Mohamed Mahamud, who has a total of Sh 2.3 billion in pending bills, according to the auditor general, was cleared to pay Sh 2 billion having been stopped from paying Sh317 million.

Sonko has also been cleared by the auditors to settle Sh11.7 billion out of the list of Sh23.1 billion he submitted to the auditor general for scrutiny.

Makueni Governor Kivutha Kibwana leads governors in paying pending legible bills. The governor has only Sh1.7 million in legible pending bills having paid out Sh32.6 million of the Sh33 million worthy bills. He had submitted Sh34.9 million in pending bills for validation.

This month, Sonko promised to settle all pending bills within the stipulated 30 days in line with a directive by President Kenyatta.

While contractors and suppliers had claimed that they are owed Sh60 billion by City Hall, a task force formed by Governor Sonko pegged the figure at Sh6.4 billion after thorough scrutiny.

Kiambu Governor Ferdinand Waititu, who is being invested by the EACC on graft allegations, can only pay Sh 1.8 billion out of the Sh 3.3 billion pending bills.

Nakuru Governor Lee Kinyanjui can also only pay Sh 420 million of the Sh 2.5 pending bills. The auditor has raised alarm on the Sh2 billion, which he has already declared ineligible, according to the leaked documents. Multiple sources in the Auditor's office told the Star that the documents have been forwarded to the National Treasury, the presidency and the Commission of Revenue Allocation for action.

Ouko also flagged Sh500 million ineligible payments in Sh 1.2 billion pending bills that Tana River Governor Dhadho Godhana wants to pay. 

While delivering the 2019-20 budget speech, Treasury Cabinet Secretary Henry Rotich said the government has committed to be paying suppliers within 60 days, and proposed penalties for all entities that delay payments.

This, he said, will support Micro-Small-and Medium Enterprises (MSMEs) and the business community, leading to improved liquidity to suppliers and contractors.

The counties will also be expected to adhere to this proposed policy once it is approved by Parliament.

On Thursday, Rotich said the national government has reviewed all existing pending bills as was recently directed by Uhuru and that Sh10.9 billion of verified pending bills will be paid before the end of this month.

“This should eliminate most pending bills owed to the youth, women and persons living with disabilities under the Access to Government Procurement Opportunity,” the CS told MPs.


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