• The auditor also questions Sh22 million loan given against fake title deeds.
• The matter has been taken over by EACC
Image: Handout
Agricultural Finance Corporation cannot explain grants totalling Sh2.4 billion, Auditor General Nancy Gathungu has said.
The amount is part of the Sh3.7 billion the state corporation has disclosed in the financial statements in respect to grants.
However, the management could not support with relevant documentary evidence, grants amounting to Sh2.4 billion casting into doubt the accuracy of the entire grant amount.
“Supporting documents for grants totalling Sh2,468,923,000 were not provided for audit review. In the circumstance, the accuracy and completeness of the balance of Sh3,768,923,000 in respect of grants could not be confirmed,” the audit report indicates.
The 2020-21 report further reveals that AFC advanced Sh22,661,000 to 13 farmers in Kapsabet against fraudulent title deeds.
The auditor points out that even after the corporation managed to get favourable judgment, it was yet to execute the orders by the time of the audit.
“The corporation filed seven cases in court against the fraudsters and judgment was entered in favour of the corporation. However, the corporation had not executed the warrants issued as at 30 June, 2021,” the report reads.
The report tabled on the floor of the National Assembly last week by Majority Leader Kimani Ichung'wah questions the motive of a letter originating from AFC's head of legal services to the corporation’s chief finance and investment officer dated January 20, 2022 which reduced the amount of loans advanced to Sh11,182,500.
According to the audit report, the circumstances under which the loan amount was almost halved were unclear and the management did not offer an explanation.
This, the report says, puts into doubt the recoverability of medium-term loans issued on fake title deeds.
“The matter has since been taken over by the Ethics and Anti-Corruption Commission for investigations. In the circumstances, the recoverability of the amount of Sh22,661,000 is doubtful,” Gathungu says.
The report casts doubt on the recruitment of 57 staff externally with no external advertisement for the posts made available to the audit team.
The auditor expresses fears that the corporation may not have attracted the most suitable candidates for the vacancies or filled the vacancies in a transparent way.
“Evidence of external advertisements for the posts was not provided for audit review. It could therefore not be confirmed if the corporation reached the widest poll of potential applicants and allowed for sufficient number of days before closing the advert,” Gathungu says in her report.
“Further, internal advertisements done during the year did not contain the number of available vacancies and detailed job descriptions and were therefore incomplete and lacked proper guidance and transparency to the potential applicants.”
The report also reveals that AFC has 29 developed plots measuring 5.3324 hectares valued at Sh191 million and seven undeveloped measuring 1.5383 hectares with no ownership documents.
“Although the management explained that it continued with the pursuit of the ownership documents through the Ministry of Lands and the National Land Commission, the documents had not been obtained as at the time of audit,” it says.