REVEALED: Taxpayers lose Sh1.8B in NYS-style prison theft

Rot in the Prisons department that could have cost the taxpayer more than Sh1.8 billion in an NYS-style theft has been exposed in a new audit report.

The report by Auditor General Edward Ouko details how the department paid phoney suppliers, made double payments for goods and services and procured fake bulletproof vests and jackets.

The audit comes just months after the EACC unearthed an audacious attempt to steal Sh4.8 billion through fictitious security contracts by top prison officials and those in the Interior ministry.

Isaiah Osugu who retired this year as commissioner general of prisons after more than 10 years, was in charge during the questionable payouts.

Auditors, for instance, discovered that Sh304.4 million paid at headquarters on behalf of various prisons for food rations could not be traced to the records maintained in a single prison.

In yet another suspicious payout, Ouko discovered that two suppliers who were paid Sh2.4 million by prison headquarters on behalf of Kibos Medium Prison did not deliver the food rations.

According to the report, prison bosses in Nairobi purportedly wired Sh12.4 million in relation to pending bills for Kisumu Main Prison but the funds were never received by suppliers.

“Indications are that the payments were irregularly made to recipients who did not supply food to the prison,” the report for the 2016-17 states.

This was the period when Kenya was headed into the hotly contested general election.

Ouko also discovered cases of double payments totalling Sh22.5 million in connection with Naivasha, Eldoret and Kakamega Prisons and Shikusa Borstal.

Some alleged suppliers who were contacted by the auditors during the audit verification were surprised that they had supplied to the prisons yet they had neither bid for nor delivered anything.

Records maintained at headquarters show that bills amounting to Sh7.4 million, Sh10.7 million and Sh10 million were pending at Meru Women's, Nyeri Medium and Naivasha Medium Prisons, respectively.

“However, verification at the prisons revealed massive irregularities as the purported suppliers had never been contracted to supply food and there were no deliveries or receipts at the three prisons,” the audit states.

The audit also shows that prison bosses kept a list of fake pending bills running into hundreds of millions of shillings.

For instance, bills totalling Sh288.6 million reflected in the headquarters' records could not be traced to the records of the prisons where food rations were claimed to have been delivered.

In addition, bills totalling Sh18.6 million for food rations, which had already been paid for by headquarters staff in Nairobi, were still listed as pending.

The Prisons department is also on the spot for procuring 300 substandard bulletproof and 300 bulletproof vests for Sh22.2 million and Sh20.9 million, respectively.

The substandard bulletproof jackets were meant to increase officers' safety n risky situations.

While the jackets were distributed to officers across the country, the report shows that the warders could be endangering their lives by thinking their safety is protected against an armed enemy.

“Audit inspection carried out revealed that the body armour received do not have ballistic panels and cannot be used to protect staff against rifle fire, ammunition, knife stabs and sharp or pointed instruments,” Ouko reported.

In March this year, the EACC  unearthed a Sh4.8 billion scandal orchestrated through fictitious security contracts.

Some of the companies awarded the multi-million shilling contracts to supply heavy artillery, including submachine guns, had no known address.

The EACC had sent the file to the DPP Noordin Haji recommending high-profile prosecutions but any purge is still pending.

The new audit report also reveals fraud in Sh2 million issued to the officer-in-charge of Naivasha Maximum Prison for construction of staff houses.

There was evidence of double payments of suppliers for construction materials, which were all purportedly issued to the construction site with nil balances of materials in the store at the time of the audit.

Also questioned is Sh128.6 million paid for firewood for prisons countrywide.

Ouko said that while the firewood was claimed to have been received in the relevant stores and issued out, there was no proof as delivery notes were not provided.

Ouko is also flagging the award of a tender for construction of a perimeter wall at the Eldoret Prisons for Sh24.8 million.

The auditor says there were indications that the contractor was awarded the tender and immediately paid the full amount before prisoners were engaged to construct the same wall for an additional Sh7.5 million.

Regarding the tender for the installation of CCTV surveillance cameras at the Naivasha GK prison, Ouko points out massive irregularities that led to the loss of Sh1.7 million public funds.

He says that although the contractor was paid Sh 12 million for the purported supply of 190 cameras, verification confirmed the existence of only 158 cameras, resulting in a loss of 32 five Megapixel Cameras.

“The audit further established that 52 cameras costing Sh 4.5 million installed at the reception and hospital blocks are defective and, therefore, not functioning,” Ouko reported.

Further, the audit revealed that the contractor supplied eight Power Distribution Boards instead of 30, resulting in a loss of 22 others costing Sh 550,000.