A new report has laid bare the dire financial state of the Postal Corporation of Kenya (PCK), revealing a mix of mounting losses, questionable accounting practices, and wasteful expenditure that threatens the state-owned entity's survival.
Among key highlights of the report by Auditor-General Nancy
Gathungu for the year ending June 2024 is how
Posta paid Sh147 million in unnecessary interest payments, classified as
nugatory expenditure, symbolizing the corporation's broader financial
malpractice.
The nugatory expenditure of Sh147 million resulted from the corporation's failure to remit staff pension deductions on time.
“The value for money resulting from the expenditure of Sh147 million couldn’t be confirmed,” Gathungu said in the report tabled in Parliament.
The auditor has further sounded an alarm bell over PCK's ability
to continue operating, with the corporation sinking deeper into insolvency.
A staggering Sh1.1 billion net loss has pushed accumulated deficits to Sh7.3 billion. The corporation's current liabilities hit Sh9.5 billion, dwarfing the current assets of Sh1.8 billion.
As a result, the entity posted a Sh7.7 billion negative working capital, representing a cash flow crisis amid pending bills and no clear signs of a turnaround in the near future.
Gathungu is concerned that despite the grave situation, the management failed to properly disclose these going concern risks in their financial statements.
At the same time, shockingly, the audit uncovered Sh3.5 billion in unremitted payroll deductions, including Sh1.1 billion in unpaid taxes and Sh1.9 billion in pension contributions, violating employment laws and betraying workers' trust.
“This is against the law which requires an employer who deducts an amount from an employee’s remuneration to pay the amount deducted and remit the same within the stipulated time. The management was in breach of the law in the circumstances,” the report reads.
Asset management emerges as another concern for the auditors. The corporation carries Sh1.7 billion in questionable land assets, including 34 disputed parcels and 55 properties without title deeds.
Meanwhile, accounting irregularities have allowed Sh255 million in
operational software to remain classified as "work in progress" for
eight years, artificially inflating asset values.
Another Sh57 million was found sitting wasted on obsolete software systems that have never been used.
The auditor has further exposed Sh1.6 billion in dubious received supplies, including Sh177 million from a terminated contract without documentation.
Another Sh26 million is feared lost to employee fraud with no recovery efforts.
On the liabilities side, Sh96 million in purported contingent liabilities from 1999 was not backed up by verifiable documents, while Sh31 million in ancient debts continue to distort financial reporting.
The auditor has further raised concerns over budgetary indiscipline.
This was after actual revenue fell Sh1.4 billion (41 per cent) short of projections while expenditures exceeded income by Sh754 million (38 per cent).
“The going concern of the corporation is uncertain without the support from the government, bankers, creditors, and other stakeholders,” the auditor general said.
While the Auditor-General concludes that internal controls remain
effective, the financial irregularities tells a different story.
From the Sh147 million wasted on avoidable interest payments to billions in unremitted deductions and questionable assets, the report paints a picture of an institution in critical condition.
With unresolved issues accumulating year after year and the Public Investment Committee yet to act on previous findings, the audit raises urgent questions about PCK's future.
Unless drastic measures are taken to address these systemic failures, Kenya's postal service risks collapsing under the weight of its own mismanagement, with taxpayers left to foot the bill for years of financial negligence.
