- Ministry also reprimanded for unnecessary legal costs of Sh17.9 million for breach of contract with communications consultant.
- Auditor also questions failure by ministry to resolve outstanding audit queries raised in the last financial year.
Image: FILE
The State Department for ICT has been reprimanded over unclear payments to a contractor for the Konza City project to the tune of Sh12.5 billion.
Auditor General Nancy Gathungu said the payments to the contractor that were executed by a lender on behalf of the ministry were in doubt.
The payments were made by a Chinese Bank from which Kenya borrowed Sh12 billion for the implementation of the Konza Data Centre and Smart Facilities Project.
They comprised borrowings of Sh2.67 billion for the Data Centre, Sh609 million from China for the National Fibre Optic Backbone Project and Sh9 billion for the Konza Techcity project.
“However the payments were supported by photocopies of documents instead of the original documents,” Gathungu said.
She reported that the management when asked about the payments, said the original documents were forwarded to the lender.
“Consequently, it has not been possible to confirm the propriety of payments totalling Sh12.5 billion,” Gathungu said in her review of the ICT ministry’s books of accounts as of June 2021.
The audit has further criticised the department for subjecting taxpayers to unnecessary payment of millions in an avoidable lawsuit.
The Sh17.9 million liability is in respect of a case where the court ruled against the department for breach of contract with a marketing consultant.
ICT department in 2016 entered into a contract for the provision of public relations, communication and event management agency services at Sh19 million.
The ministry, however, paid Sh7.6 million but failed to pay the balance of Sh12.2 million, after which the contractor sued the ministry for breach of contract.
The case was ruled in favour of the consultant who was awarded Sh12.2 million, outstanding payment of Sh459,492 as legal costs and Sh5.2 million compounded interest from February 2018 to November 2021.
Gathungu asked why the ICT ministry disclosed only Sh11.5 million as the contingent liability, resulting in an unexplained variance of Sh6.4 million.
“The public did not receive value for money in the additional cost of Sh5.7 million above the initial contract sum of Sh19 million that could have been avoided had the management complied with the terms of the contract,” she said.
The state department is also on the spot for failing to resolve audit queries that were raised by Gathungu in her review for the year ending June 30, 2020.
“Although the management has indicated that some of the issues have been resolved under progress and follow up of auditor’s recommendation, the matters remained unresolved as at June 30, 2021,” the auditor said.
In the said audit, Gathungu raised an adverse opinion on the ministry, shining a spotlight on infractions in the multibillion shillings mega ICT project.
Gathungu flagged irregularities in the contracting and management of the National Optic Fibre Backbone Infrastructure.
Among the issues were that the government paid internet service providers Sh132.3 million yet it owns the fibre optic facility.
She further asked why the ISPs have never been charged for the use of the fibre optic infrastructure since its installation more than five years ago.
NOFBI project is presumed to have been in operation since 2014 and is being used by most of the data service providers in the country.
“No explanation has been provided for this anomaly,” the auditor said, citing a breach of the financing agreement where the government was to sell the excess capacity to finance loan repayment.
She also decried that records detailing the users connected to the NOFBI since installation, their utilisation levels and the amount payable by each were not provided.
The auditor also said taxpayers did not get value for money in an Sh8.9 billion that was spent in the county connectivity project.
Also queried is the payment of Sh2.5 billion made by financiers of two contractors in respect to NOFBI and the CCP – part of phase2 of fibre expansion.
Gathungu questioned the legality, propriety and justification of loans totalling Sh16.5 billion that are being repaid by the ICT Authority.
She raised concerns that as much as the ministry was funding the repayment, records of assets acquired through the loans have not been recorded.
Also flagged was that the department operated without an audit committee contrary to the Public Finance Management Act, 2012.
(edited by Amol Awuor)