Senate asks EACC to probe Nakuru's Sh200 million loan

County under Gvoernor Mbugua took bank overdraft in 2013 ostensibly to pay workers

In Summary

•Finance officers say county has been paying Sh760, 000 monthly in interest and penalties since 2013

•Governor Lee Kinyanjui says he has no idea how much the county has paid Family Bank

Integrity Centre, where EACC is housed.
Integrity Centre, where EACC is housed.
Image: FILE

Nakuru county finance officers are facing investigations over a questionable Sh200 million bank loan that cost the taxpayer about Sh40 million in interest and penalties.

A Senate oversight committee has recommended that the Ethics and Anti-Corruption Commission probes the borrowing after Governor Lee Kinyanjui failed to satisfactorily explain it.

Kinyanjui appeared before the Senate County Public Accounts and Investments Committee to respond to 2017-18 audit queries.

The county took the overdraft from Family Bank during former governor Kinuthia Mbugua’s reign to ostensibly pay workers’ salaries in 2013.

The lawmakers, however, were curious about the deal after county finance officers disclosed in financial statements the county had been incurring at least Sh760, 000 in interest and penalties monthly since 2013.

“This loan was taken back in 2013 and we have been servicing it since we came to the office until March 31 this year when we retired it,” Kinyanjui said.

But the committee chaired by Homa Bay Senator Moses Kajwang questioned why the county government had taken long to settle the loan and why the signatories failed to negotiate the repayment terms and interest applicable.  

“Obviously, this loan was a bad idea. This loan ought to have been retired earlier even before you came into office. This loan ought to have been your first priority. It ought to have been dealt with as a matter of urgency because spending Sh760, 000 a month, the county was bleeding as a result of this,” Kajwang said.

Matters got murkier after the county chief said he could not state the total amount the county used to settle the loan.

“We retired the loan on March 31, so the total amount we paid will be captured in our financial report for last year. I don’t want to say a figure then tomorrow there will be a difference,” he said.

Kajwang ordered the governor to provide a resolution by the assembly authorising the loan as well the total amount the county incurred on the loan. He said the committee will recommend to the EACC to investigate the deal.

“This could be a smoking gun and it is one of those things that we might want EACC to take a keen interest to look into,” he said.

Isiolo Senator Fatuma Dullo said proper negotiations and repayment plans should have been put in place on when the money should be paid.

“There should have been a structure or bargain in a way that the government does not lose money because this is money lost,” she said.

The governor was also put to task to explain why some Sh1.2 billion meant for development was not utilised as at the end of the 2017-18 financial year.

He explained that the money was not lying idle in the accounts, adding it had been budgeted for though the projects had not matured for payment as at the closure of the financial year.