A report by Auditor General Nancy Gathungu has revealed how
128 Busia county employees disguised themselves as farmers to benefit from
“free” agricultural loans, exposing the devolved unit to a possible loss of
Sh50.7 million in non-performing loans.
Governor Paul Otuoma was put on the spot by senators on
Monday over the scandal, which stems from the Busia County Agricultural
Development Fund (BCADF).
The fund was created to support small-scale farmers but has
now been marred by irregularities, weak laws and outright abuse.
According to the Auditor General’s report for the financial
year ending June 30, 2024, at least Sh53.7 million was disbursed to farmers
between 2016 and 2024 without any form of collateral.
The period spans the regimes of former Governor Sospeter
Ojaamong and his successor, Otuoma.
Initially, only 63 staff members admitted to receiving
loans, but a deeper audit unearthed 128 county employees pocketing Sh4.8
million from the kitty.
The revelations point to a collusion between the county
executive and county assembly, who allegedly watered down the Busia County
Agricultural Development Fund Act, 2014, to remove provisions on security and
recovery mechanisms.
The fund, designed to be a revolving scheme, is now at risk
of collapse.
Appearing before the Senate County Public Investments and
Special Funds Committee, Governor Otuoma admitted the loans were given without
safeguards, blaming a “defective law” he inherited.
“The money was meant for small-scale farmers who could not
get commercial loans. Initially, we thought only farmers benefited, but an
audit revealed county staff were also involved,” Otuoma told the committee.
He said his administration has written to defaulters and
proposed amendments to tighten the law. However, senators accused him of
dragging his feet.
Machakos Senator Agnes Kavindu and nominated senators
Raphael Chimera and Hamida Kibwana questioned why recovery efforts only started
in March 2024, two years into Otuoma’s tenure.
“It seems Busia is giving free money, and no one is serious
about recovery,” Chimera said.
Busia Senator Okiya Omtatah pressed the governor to act
against officers who knowingly approved unsecured loans, warning that Article
226(5) of the Constitution holds public officials personally liable for loss of
public funds.
“Crack the whip. Pursue both the officials and the
beneficiaries,” Omtatah said.
Committee chairperson Godfrey Osotsi suggested the county
starts by deducting loans directly from employees’ salaries, saying, “Sh53.7
million is not pocket change.”
The senators also flagged irregularities in another kitty —
the Busia Cooperatives Enterprise Development Fund — where 92 co-operatives
received Sh106 million between 2014 and 2019 without collateral.
By June 2023, only Sh39.4 million had been repaid, with just
Sh2.8 million recovered from defaulters.
Governor Otuoma told the committee that the county attorney
had been directed to initiate legal proceedings.
But nominated senator George Mbugua raised doubts on whether
the money ever reached the co-operatives, hinting it may have been pocketed by
rogue officials.
“We can’t let this money disappear, especially given the
poverty levels in Busia,” Omtatah said, calling for former county officials to
also be summoned.
As the grilling went on, senators warned that unless
recovery action is taken, Busia risks setting a dangerous precedent where
public funds are looted with impunity.
INSTANT ANALYSIS
The unsecured loans were flagged by the Auditor General
Nancy Gathungu in her latest report for the financial year ending June 30,
2024. According to the auditor, the statement of financial position reflects
the current portion of long-term receivables from exchange transactions of Sh67.4
million, which relates to loans issued to various cooperative societies.
However, no evidence was provided in support of collateral pledged on the loans
issued.
