Millions for Covid task force never hit Treasury accounts — PS

Parliament is investigating missing millions of shillings collected by the President's Covid-19 task force after it emerged the money never hit Treasury accounts.

Treasury PS Julius Muia on Wednesday told a parliamentary committee that the emergency cash collected by the task force is not reflected in the Treasury’s books of accounts. This was after the fund was transformed into a private limited company.

The exact amount is not known but Sh1.3 billion was collected by December 31, 2020.

The Covid-19 Emergency Response Fund was formed on March 27, 2020 to among others facilitate voluntary contributions to help in the fight against the respiratory disease in the country.

Kenya Breweries Ltd managing director Jane Karuku was the chairperson of the 12-member board drawn from both the government and private sector.

Others were Michael Joseph (Safaricom), James Mwangi (Equity Bank), Narenda Raval (founder, Devki Group of Companies), Joshua Oigara (KCB Bank), Jeremy Awori (ABSA bank) and Wachira Waruru (Royal Media Services).

Also on the board were Mohammed Hersi (Pollmans Tours and  Safaris), Phyllis Wakiaga (Kenya Association of Manufacturers) and Kennedy Kihara (Principal Administrative Secretary at the Office of the President).

Interior Cabinet Secretary  Fred Matiang’i and Kakamega Governor  Wycliffe Oparanya were designated as joint representatives of the government to the Fund.

Appearing before Public Accounts Committee, Muia disclosed Treasury was not represented in the Fund and the board was entirely responsible for the accounting of the funds received.

This non-representation was contrary to the Legal Notice No. 38 that created the Fund and mandated the Treasury PS as the administrator.

Auditor General Nancy Gathungu said Kennedy Kihara from the Office of the President was the administrator of the Fund after it changed status from public to private company.

Muia explained the Board on June 12, 2020, formed a private company to manage its collection, hence, transforming it into a private limited company.

“The taskforce monies are not in our books of accounts, as National Treasury we did not participate on what was going on in the company. If you look at the composition of the Board we were not represented as National Treasury," Muia said.

“The Fund board set up an emergency fund limited company, which was a company limited by guarantee and in this case the Fund managed its activities through the Board that was set up.”

MPs asked  how the Fund that was created under Public Finance Management Act transformed itself into a private company, even after collecting money from the public.

Ordinarily, a Fund created under PFM Act is under the purview of the Treasury.

The Auditor General said the fund had collected Sh1.3 billion by December 31, 2020.

"If the legal notice was to establish the fund under PFM Act, at what time was the decision made to register it as a private company?" asked PAC chairman Opiyo Wandayi.

He added, "So government officers and the private sector came together to establish a private company to manage public funds?"

Funyula MP Wilberforce Oundo said the transformation is suspect, given the legal notice establishing the Fund was never revoked.

The Committee is investigating how government agencies used funds in the fight against Covid-19 pandemic in the country between March 13, 2020, and July 31, 2020.

Wandayi said the oversight committee will invite both the Fund chairperson and Attorney General to explain the situation further.

The PS also told PAC  Treasury received Sh224 billion from various sources between the period to manage the pandemic.

From that amount, the country received Sh113 billion from the World bank, Sh78.3 billion from IMF, Danida gave Sh350 million while AfDB bank gave Sh22.4 billion. All were concessional loans.

(Edited by V. Graham)