Cabinet directs DCI to probe Sh6.2 billion payroll fraud

The Cabinet has approved sweeping reforms aimed at eliminating payroll fraud in government, following an audit that uncovered suspected irregularities amounting to Sh6.2 billion.

President William Ruto has chaired a cabinet meeting at State House that directed the Directorate of Criminal Investigations (DCI) to investigate the suspected fraud, identify those responsible and recover lost public funds.

According to a Cabinet dispatch, the reforms are intended to dismantle long-standing payroll fraud schemes, restore integrity to the public wage bill and safeguard taxpayers' money through a government-wide payroll clean-up.

The decision follows a comprehensive audit of government payroll systems, which found widespread weaknesses in payroll governance. A sample audit covering 12 of the 53 State Departments uncovered suspected payroll irregularities worth Sh6.2 billion.

The audit revealed unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions, fragmented payroll management and significant oversight gaps.

“The decision follows a comprehensive Government payroll audit that uncovered widespread weaknesses in payroll governance. A sample audit of 12 of the 53 State Departments revealed suspected payroll irregularities amounting to Sh6.2 billion, exposing unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions, and fragmented payroll management and major oversight gaps,” the dispatch read.

Cabinet directed the DCI to investigate the alleged payroll fraud, verify personal numbers used in payroll processing, dismantle criminal networks manipulating government payroll systems, recover stolen public funds and ensure the immediate arrest and prosecution of those found culpable.

To strengthen accountability, the Cabinet also approved the immediate implementation of a comprehensive payroll reform programme across government.

The reforms include a government-wide audit of all remaining State Departments and public institutions, mandatory migration of all Ministries, Departments, Agencies (MDAs) and State corporations to the revamped Integrated Human Resource and Payroll System (IHRPS), enhanced cybersecurity measures, payroll data cleansing and validation, establishment of a disaster recovery site and integration of payroll systems with other public financial management platforms.

In a separate cost-cutting measure, the Cabinet suspended the leasing or hiring of additional office space across the government pending a comprehensive audit of the utilisation of existing public offices.

The government will also develop a programme to renovate public office buildings to improve efficiency and enhance service delivery while reducing expenditure on rented office space.