How Sh3.78 billion education scandal was brewed

The Ministry of Education could have lost more than Sh3.7 billion over two years in an intricate scheme that seems to have started in the early years of the Jubilee administration, an audit report indicates.

It involves inflation of student numbers, creation of ghost schools and double payments to some institutions to syphon taxpayers' money.

With the fictitious statistics, billions are then wired to schools for the free primary and secondary school education. The money is based on student numbers.

The alleged misdeeds have been exposed in the latest report by Auditor General Nancy Gathangu. The problems are also captured in the 2017-18 and 2018-19 audit reports.

In the new audit covering the last financial year, Gathungu revealed Ministry of Education officials made an overpayment of Sh1.81 billion to about 2,610 public secondary schools in different counties.

The auditor said the overpayment arose, from among others “inflation of enrolment numbers and double payment to schools”.

“The overpayments arose from erroneous computations of July and September 2019 disbursements, inflation of enrollment numbers in January, 2020 and double payments to some schools,” the report reads.

Of that amount, the report says Sh26.83 million was disbursed to five schools whose existence was in doubt.

The schools’ registration certificates, Teachers’ Service Commission appointment letters and posting of the principals and boards of management meetings approving the opening of banks accounts were not made available to the auditors.

“In the circumstances, it is not possible to confirm the accuracy and validity of the reported subsidies of Sh58.77 billion for the year ended June 2020,” Gathungu says.

At the time, Belio Kipsang was the Principal Secretary and chief accounting officer for the state Department of Early Learning and Basic Education.

Kipsang was moved from the Education Ministry in February last year by President Uhuru Kenyatta. He is now PS  in the state department of Northern Corridor Development. He was replaced by Julius Jwan.

The Ministry of Education is one of the heavily funded ministries in the Jubilee administration as it oversees the implementation of free primary and secondary education.

In the 2021-22 financial year, for instance, the Ministry has been allocated Sh503 billion. This amount includes Sh62.2 billion for free secondary education, Sh12 billion for free primary and Sh4.2 billion for improvement of school infrastructure.

In 2018-19, the ministry disbursed as much as Sh919.17 million to schools that could not be traced.

The schools had no identification numbers, some of which could not be traced in the National Education Management Information System (Nemis) and the list of TSC-registered schools.

“The transfer of funds was against ministerial guidelines on funds disbursements. In the circumstances, it is not possible to confirm the authenticity of the disbursements,” the report reads.

The revelations kicked up a storm, with MPs asking investigating agencies to swing into action.

When he was under siege with the Public Service Commission removing from him the human resource function, Education CS George Magoha spilled the beans on the scheme.

The CS said the reforms he was initiating at the Ministry to streamline services and stop theft of public money were facing resistance.

“This management approach has been instrumental in identifying lapses within the Ministry where public funds have been misappropriated and measures to ensure that I effectively intervene have been deployed,” he said.

Magoha said that as result of the reforms, an inflation of numbers of learners from 8.47 million to nine million learners was identified. The shortfall of 529,997 learners led to the saving of Sh752.59 million annually, he said.

In addition, he disclosed the inflation of cost of desks that were delivered under the government stimulus programme.

“When I did due diligence of establishing the market prices of the desks, I realised that the unit at the ministry had inflated the cost by Sh1,700, which means only 250,000 desks would have been supplied."

The 2018-19 audit also shows that the ministry lost Sh8.02 million through irregular disbursements to low-cost boarding schools in the counties.

Of the amount, Sh6.57 million was excess payment made as a result of the state department using enrolment figures that were higher than those confirmed by the county directors of education in some schools.

“A balance of Sh1.45 million was paid to undeserving schools not in the list of low-cost boarding Schools confirmed by the county directors of education,” the audit report reads.

In addition, the ministry, through the state department, made overpayments amounting to Sh369.90 million to 99 primary schools sampled from 13 counties because of inflation of enrolment data.

Further, the ministry made overpayment of subsidy funds amounting to Sh105.90 million to 331 public secondary schools in different counties as a result of inflated enrolment data.

“A comparison of the disbursement schedules for terms 1 and 2 of 2019 with the schedules for term 3 of 2018 for sampled counties revealed discrepancies between the data submitted by the schools and the data reflected by the State Department that was used for calculation of subsidy amounts due to schools,” the report reads.

The scheme continued unabated at the ministry even after a top official was interdicted for inflating student numbers in 2017-18.

As a result of the manipulation of enrolment data, the ministry made overpayment amounting to Sh269.25 million to 185 schools from 11 counties. In addition, two non-existent schools in Kakamega received a total of Sh27.32 million during the year.

“Although the State Department has explained that the officer involved in the data entry that resulted in a variance …was interdicted and the matter referred to the EACC for further investigation, the case has not been concluded,” the 2017-18 report states.

(Edited by V. Graham)