Details have emerged of how commercial banks handling cash for elderly persons have for years traded with some of the donations without paying interest.
A new audit, putting the Social Protection department on the spot, shows that the amounts had accumulated to Sh1.5 billion as of June 30 last year.
Auditor General Nancy Gathungu has flagged the irregularity after the department failed to disclose the matter in its financial reports.
While the department said that its bank accounts had Sh1.07 billion as of June 30, 2023, the auditor general held that there was more.
In this respect, she reported that the balance as reported excluded balances in six holding accounts of service providers totalling Sh1,465,059,078.
“Management did not provide an explanation for the failure to include the amount of Sh1,465,059,078 in the cash and cash equivalents balance,” Gathungu said.
She added that the department did not provide details – bank reconciliation statements for the balances held in different holding accounts.
“In addition, no interest income was earned from the balances held in the holding accounts,” the auditor said.
As a result, Gathungu said the balances reported by the department were in doubt. “The accuracy and completeness of the bank balances could not be confirmed,” she said.
The audit has further flagged beneficiaries who have since passed away or ceased to exist for other reasons but have not been removed from the database.
During the year under review, cases were highlighted of 8,934 beneficiaries who were yet to be exited from the system.
Banks handling the cash, the report reveals, returned Sh214 million to the accounts of the state department after the beneficiaries failed to access them for more than 12 months.
Gathungu says it was illegal for the department to keep the beneficiaries in the register, citing a requirement of the contract that such be removed within eight months.
“Management did not provide satisfactory reasons for the failure to exit the beneficiaries from the programme. In the circumstances, management was in breach of the regulations.”
The report further reveals that several land for children institutions have been encroached into, locking out the intended beneficiaries.
Gathungu cited cases at the Getathuru National Reception, Assessment and Classification Centre located in Westlands, Wamumu Rehabilitation School, Nairobi Remand Home, Othaya Rehabilitation School, Kabete Rehabilitation School, Muranga Children’s Remand Home, and Thika Rescue Centre.
At Getathuru, a construction company was given five hectares to set up a building site for works on the Redhill bypass.
The company built a double permanent perimeter wall on the property as a residence and a yard for machinery.
Gathungu says no lease agreement was provided, making it impossible to determine the terms under which they are using the property.
No evidence of receipt of revenue from the company was provided by the state department, with details showing the company has continued to use the property for three years since the project was completed.
At Wamumu, the school occupies approximately 76 hectares out of which 40.5 hectares of land was allocated to Kemri and another 26 hectares to a local group calling themselves “Watu wa Mihiriga Kenda”.
Gathungu said no approval documents were provided for the allocation, adding that documents provided revealed that the PS was sidelined in the correspondences.
The rehabilitation centre, the director of Children Services and the county coordinator for Kirinyaga National Lands Commission acted on their own.
The auditor general says this was “an indication of the irregular transfer of the parcel of land.”
An inspection carried out at Nairobi Remand Home in September last year also revealed that the Kenya Power and Lighting Company had built a substation on about half an acre of the land.
“No lease agreement was provided for review,” Gathungu said, further revealing that Othaya County Level 4 Hospital and a church also occupy land meant for the Othaya Rehabilitation School.
A private developer, who claims to have been granted ownership of the property following a contentious court case, has encroached and alienated about five acres of the Kaebete Rehabilitation School.
“The litigation file was also not provided for audit inspection to determine the status of the case,” the audit reads.
Muranga Remand Home, the report reveals, has no fence and has been encroached upon by private developers who have put up permanent buildings on the land.
Thika Rescue Centre occupies approximately 10.1 hectares but the parcel of land has not been fenced and management has not taken measures to safeguard the public land from encroachment and alienation.