Senate seeks probe as counties fail to account for billions

Governors and senior county finance officials are facing possible prosecution after the Senate summoned investigative agencies to probe widespread financial mismanagement in counties.

Senators want the agencies to look into, among other infractions, missing billions, ghost payments and unsupported expenditure across the devolved units.

In a scathing report, the Senate County Public Accounts Committee has asked the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigations to investigate multiple counties, recover lost funds and surcharge responsible officers.

“The DCI shall investigate the breach of Sections 62(1)(b) and (c) of the Public Audit Act (Cap. 412B) by the county public officers and, where criminality is established, refer the matter to the Director of Public Prosecutions for prosecution,” the report read.

The committee’s recommendations follow three months of scrutiny by the Auditor-General’s reports for the 2024-25 financial year, painting a picture of blatant fiscal indiscipline and weak accountability structures.

The committee, chaired by Homa Bay Senator Moses Kajwang, has flagged specific cases for investigation.

In Tana River, senators want the DCI to probe the cancellation or diversion of 1,229 financial transactions valued at Sh1 billion under unclear circumstances.

The committee cited possible breaches of the Public Audit Act and called for prosecution where criminal culpability is established.

The EACC has also been asked to investigate county finance officials over the possible loss of Sh69.92 million allegedly spent on air tickets without any supporting documentation.

Senators want the EACC to investigate how money earmarked for pending bills was used, with a view to prosecuting those responsible.

In Turkana county, the anti-graft agency is expected to probe the payment of Sh261.48 million to 1,252 employees outside the official payroll system, raising fears of ghost workers and payroll fraud.

“The committee recommends that the EACC undertake investigations… with a view to recommending prosecution,” the report states in multiple instances.

Further scrutiny revealed that a number of counties were paying salaries outside the official payroll system, escalating the fears of payroll fraud.

The recommendations signal a coordinated push to escalate the audit queries into criminal cases.

Beyond the individual cases, the Senate warns that counties have become hotspots of financial mismanagement.

It emerged in the probe that billions of shillings are unaccounted for due to poor record-keeping and deliberate obstruction of audits.

At the top of the concerns is the failure by county executives to submit critical financial records to the Auditor General, resulting in widespread disclaimers and qualified audit opinions.

“This obstruction makes it impossible to ascertain the true financial position of these entities and exposes public assets to the risk of loss, waste and misuse,” the committee said.

The report reveals that in many counties, fixed asset registers are either incomplete or are missing altogether, with no clear records of acquisition dates, costs or locations of public assets.

In some instances, it was established that counties have invested millions in projects built on land without title deeds, exposing taxpayers to the risk of losing entire developments through legal disputes.

The Senate also flagged a growing debt crisis at the county level, with pending bills in at least 15 counties standing at Sh32.3 billion.

However, lawmakers warned that the actual figure could be significantly higher due to unsupported and unreconciled claims.

“The more significant risk lies in the fact that a substantial portion of this debt is unsupported… rendering the true liability potentially much higher,” the report states.

Contractors and suppliers have been left unpaid for years, raising concerns that funds earmarked for settling these obligations may have been diverted.

At the same time, counties are struggling under bloated wage bills, with several exceeding the legal threshold of 35 per cent of total revenue.

In extreme cases, employee costs consume more than half of county revenues, leaving minimal resources for development.

“This fiscal indiscipline crowds out development expenditure and directly undermines the objects of devolution,” senators warned.

The committee further exposed weaknesses in revenue collection systems, including outdated property valuation rolls that have not been updated for decades, leading to massive revenue losses.

Reliance on cash collection and delays in banking revenue were also flagged as major loopholes that enable the syphoning of public funds.

“This directly contravenes the duty of a County Treasury to mobilise resources for funding budgetary requirements,” the committee said.

Pension liabilities also emerged as another major risk, with counties owing an estimated Sh115.7 billion in unremitted or delayed pension contributions.

The committee warned that failure to address the arrears could have severe consequences for workers’ retirement security.

Development spending, often seen as the backbone of devolution, is also under sharp scrutiny, with numerous stalled and incomplete projects identified across counties.

In some cases, facilities have been constructed but remain non-operational due to lack of equipment, staff or basic utilities.

“The construction of facilities without ensuring utilities, equipment or staff demonstrates poor project conceptualisation and lack of integrated planning,” the report reads.

Oversight systems within counties have also been found wanting, with many lacking functional audit committees and risk management frameworks.

Even where audit queries have been raised in previous years, little action has been taken to address them.

“This persistent inaction is a violation of the law and shows a systemic disregard for parliamentary oversight,” the committee said.

Senators also took issue with irregular payments made by counties to the Council of Governors. The argument is that there are legal provisions indicating that it should be funded by the national government.

They recommended recovery of the funds and surcharge of governors who authorised the payments.

Additionally, millions issued as imprests remain unaccounted for, with the committee calling for sanctions against accounting officers who fail to recover the funds.

The report further exposes widespread violations of labour and ethical standards, a commonplace situation in counties.

In several counties, more than 90 per cent of employees come from a single ethnic group, in breach of national integration and cohesion laws.

INSTANT ANALYSIS

By inviting EACC and DCI into multiple county cases, lawmakers are putting governors and finance officers on notice of possible criminal wrongdoing. The scale of irregularities — from unsupported billions and ghost payrolls to ballooning pension arrears — points to systemic failure rather than isolated lapses. If pursued, the probes could redefine accountability in devolved units, but past inaction raises questions about whether the momentum will be sustained.