Afya House whistleblower tells MPs to audit debt

The man who unearthed the multi-billion Afya House scandal has petitioned Parliament to audit the country’s debt commitment, including interests charged on the same.

Auditor Bernard Muchere, who lifted the lid on the Sh5 billion scandal at the Ministry of Health, cites potential misappropriation of taxpayers’ millions.

Muchere said there is need for an urgent expenditure estimates and debt cleansing by the House before enactment of the Appropriation Act.

“Interrogate the 2023/2024 domestic debt repayment estimates of Sh1,002,802,499,719 with emphasis on the interest amounting to Sh628,263,951,790 to establish their integrity,” he told MPs.

In a petition filed with the Clerk of the National Assembly, Muchere argued that the 2023/24 budget estimates is inconsistent with Article 220 of the Constitution.

“The 2023/24 annual budget estimates failed to meet the constitutional threshold as espoused under Article 220 of the Constitution and contain therein repayments of unathorised domestic debts (principal and interest), payments of interest and commitment fees on undisbursed external debts and ineligibly budgetary allocations rendering the budgetary estimates unrealistic, ”the petitioner said. 

Article 220 provides that the budget of national and county governments shall contain estimates of revenues and expenditure differentiating between development estimates and recurrent estimates.

The petitioner said that the 2023-24 budget estimates are inconsistent with Article 220 as it does not declare all revenues in the budget estimates.

This, he said, creates a loophole allowing the Treasury Cabinet Secretary to borrow domestic debts, which now stand at Sh5.3 trillion for the last nine financial years.

“It follows that the enactment of the Appropriation Acts based on these estimates will also be inconsistent with the Constitution,” Muchere said. 

He said that all revenues were not entered in the budget estimates as provided under Regulation 33 of the Public Finance Management  Regulations, 2015, instead only external debts revenues were factored under the development expenditure estimates.

“As it has been the tradition, Parliament will enact the Appropriation Act leaving lacuna for the Cabinet Secretary/ National Treasury to fill in revenues estimates.

“After the passage of the Appropriation Act(s), the Cabinet Secretary/ National Treasury gazettes under the statement of actual revenue and exchequer issues, expenditure estimates, and revenue estimates including domestic debts that were not appropriated in the Appropriation Act(s).”

In so doing, Muchere said that the country ends up with unauthorised debts that are then passed to the taxpayers.

The country, he said, has accumulated Sh1 trillion for repayment of domestic debts outside the Appropriation Acts.

“In the 2023/24 budget estimates there is allocation for payment of interest of Sh628 million equivalent to 62.65 percent of the domestic debt repayment of Sh1.0 trillion,” Muchere said.

“The interest payment is extremely high, and it is almost equivalent to the development estimates of Sh714 Billion . This raises a red flag as to the integrity of the interest on domestic debts.”

The petitioner now wants MPs to align the the revenue estimates with expenditures before enactment into Appropriation Act.

Muchere also drew attention of MPs to the Sh1.1 trillion undisbursed loans demanding they establish their integrity and the amount of commitment fees and interest realing to the same.

A March 2023 report by the select committee on public debt and privatisation did put undisbursed loans at Sh1.179 trillion which incurs commitment fees yearly.

“In terms of the provisions of section 50(3) of the PFM Act, 2012 loans are borrowed for the approved budget by Parliament and as allocations of loans approved by Parliament,” the petitioner said.

“If Sh1.179 trillion loans were borrowed for the budget the loans would have been disbursed within the financial year the loans were borrowed. This raises a red flag as to whether the said loans were authentic.”