Counties embezzled Sh300 billion in three years — report

Nearly Sh300 billion was lost in counties in the first three years of devolution, a report has revealed.

The County Audit Fiduciary Risk report tabled in the Senate on Wednesday reveals that the money was lost between 2012 and 2015.

In 2012-13, the audit shows that Sh2.4 billion was lost in the counties. The figure increased to Sh83.2 billion in the following financial year before hitting Sh298.451 billion in 2014-15.

The report was tabled by the vice chairman of the Senate’s Public Accounts and Investment Committee Mithika Linturi.

“The Sh298.4 billion is the equivalent of nine Thika Superhighways, a new standard gauge railway from Mombasa to Nairobi or the entire economy of South Sudan,” the report reads.

Fiduciary risk is defined as the extent to which public resources are misapplied and the lack of achievement of value for money when public resources are applied.

The report shows the money was lost mostly through exaggerated pending bills, unaccounted expenditure, under-expenditure, underreporting of revenue and irregular payments.

“If Sh298.45 billion is injected into the economy in the current financial year and utilised efficiently in the productive sectors of the economy with no single wastage, it could actually help the economy achieve double-digit growth of 10.9 per cent.” 

The report says, in 2014-15 in Mandera, for instance, irregular payments in 2014-15 was worth Sh2.07 billion, Sh1.02 billion in Murang’a and Sh11.45 billion in Garissa.

Nairobi lost Sh252.9 million, Kakamega (Sh511.3 million) and Kisii (Sh465.2 million). The money was lost awarding tenders to non-prequalified suppliers and other avenues.

“The huge growth in irregular payments, if unchecked, has the potential to lead to huge loss of public funds and corruption as well as fraudulent payments with disregard to co-corporate governance and ethical standards within the county governments and in the wider public sector service,” the report reads.

In Kisumu, Sh243.7 million worth of irregular payment were made where Sh20.9 million was incurred for the governor’s full board accommodation, car hire and other hotel services.

“These cases represent a lack of adherence to laid down procurement requirements and could be an indication of corruption or graft avenues. They should, therefore, be investigated and prosecution carried out on a case by case basis,” the committee recommends.

Further, the report notes that the are counties sinking in debt as most of them had not paid salaries and allowances for the staff they inherited from the defunct councils.

"The counties are spending huge resources on payment of staff salaries, thus hurting development."

It adds, “The compensation to employee cost represents 59.77 per cent of total expenditure, an indication that the wage bill is huge compared to other expenditure.” 

The report faults the counties for constantly violating several laws including the Public Procurement and Asset Disposal Act, the Public Finance Management (County Governments) Regulations, the County Governments Act, several circulars, Salaries Remuneration Commission and the defunct Transition Authority. 

Edited by R.Wamochie