By Alex Ndegwa and Sam Otieno

A day after Education Minister Sam Ongeri said the Sh103 million Free Primary Education scandal was a creation of the media, Britain pulled yet again another rug under his feet.

Mr Gordon Brown’s administration took a step that is a vote of no confidence on the Government’s management of donor aid and public finances.

In what could further undermine President Kibaki’s pet programme, which is believed to anchor his legacy, Britain decided his administration would not touch a single coin of the Sh2.3 billion she is to inject into education in the next two months.

British Ambassador Rob Macaire (left) and Head of DFID’s Nairobi office at our Lady of Mercy Girls Secondary School in Nairobi, on Tuesday. Photo: Jonah Onyango/Standard

Instead, the UK chose to carry on with funding Free Primary Education Programme, but the money would be channelled through agencies "outside of Government channels".

The earlier freeze on Sh1.5billion funding to FPE still stands, announced the Head of the UK’s Department for International Development (DfID) Nairobi office, Mr Alistair Fernie. He added the was necessary because the UK considers the risk of fraud is "still high" in Government.

The announcement came on the same day a report by Treasury pointed an accusing finger at senior officials in the Ministry of Education for "sleeping on the job" as their juniors "went on a looting spree".

The report could further raise questions on Ongeri’s claim of innocence, given that the millions were lost right under his nose and that of his now suspended Permanent Secretary Karega Mutahi.

Probably with this in mind, British High Commissioner Rob Macaire said: "And not just those with their hands in the till, those who are responsible for preventing such fraud and who fail to act should also be held to account."

UK announced the switch in funding while also maintaining the Government had not done enough to address the risks of fraud to justify resumption of funding that was suspended earlier.

Suspension on

DfID stated that the suspension of £10 million (Sh1.15 billion) in aid to the education sector, announced after scandals in the ministry were unearthed, still stands.

But even as he announced the drastic measures, Fernie said the UK would continue supporting the FPE programme, because of the need to cushion poor children from suffering because of actions of corrupt officials. "There are some who were saying that we should pull out of the programme completely, but doing so would hurt the Kenyan school child," he said.

The UK said Kenya was yet to deal with the loss of Sh230 million meant for the FPE, several months after the scam was exposed. This figure varies from the Sh103 million reported by the media, the Sh90 million Ongeri and Mutahi conceded were lost, but it could be based on donor audit for a longer period.

Half of the amount was meant for Kenya Education Sector Support Programme (KESSP), while the other was for improving water and sanitation in poor schools.

"We are going to switch our funding to other channels," said Fernie adding: "We are not walking away from the Government. We want to resume funding through the Government but we cannot do so for now because the risk of fraud is still high."

The initial funding that would not be entrusted with Government is Sh2.3 billion (£20 million) scheduled for release next month at the start of the 2010/11 financial year.

Fernie spoke in the company of Macaire at Our Lady of Mercy Secondary School, Nairobi, where they inspected a UK-funded IT project.

Asked what the new mode of transfer would entail, Fernie said it could include channeling the funds directly to schools.

"Details are being worked out. Possible elements include continuing to provide support directly to schools, through the form of grants for orphans and vulnerable children, infrastructure and textbooks, particularly for those in disadvantaged areas," proclaimed a statement released after the news conference.

It added the UK was exploring options to improve accountability of resources at the local level, including getting parents, teachers, and the community involved in ensuring funds were spent correctly.

Macaire said the fraud at the Ministry of Education was "not acceptable". Kenya has not yet refunded the looted funds to the donors, one of the preconditions for resumption of funding, the officials reported.

Fernie said although the Government had made some progress with conditions for resumption of donor funding, the benchmarks had not been fully met.

"We do not have confidence that the necessary systems have been put in place to ensure that this does not happen again. And until we do, we cannot fund through the Government," he added.

The UK appeared to wade into the controversy of having ministers take responsibility for actions within their ministries, noting instead of only prosecuting those who stole public money the net should be cast wider.

The announcement by DfID came as a report revealed how top education officials slept on their jobs as their juniors went on a looting spree of funds earmarked for school development projects.

Government Spokesman Alfred Mutua had initially dismissed donor concerns, saying the amount of money lost was minimal. But on Tuesday he said the Government was aware of the DfID decision and would fix the process so that financial improprieties like the one in the Ministry of Education do not recur.

According to financial review of Kenya Education Sector Support Project (KESSP) Phase I Ministry of Education, the Programme’s Internal Control Framework, the officers failed to formulate policies and guidelines on disbursing of funds, giving head teachers and school management committees a leeway to loot public funds.

It remains a puzzle how 31 officials collected Sh102,795,291 through payment schedules, with forged signatures. Approved co-ordination structures were either not functioning as envisaged, or were sidelined in certain decision making processes, according to the Treasury report.

"Members of the committee interviewed even at the grassroots were not aware of the disbursements and activities," says the report.

In some instances, the functions and authorities of officers mandated to incur expenses were circumvented. Unauthorised officers were allowed to approve payments, while voucher examiners were passing either incomplete vouchers or those with several anomalies for payment.

The ministry lacked data on specific needs of schools, coupled with sudden changes of policy decisions leading to disparities in allocation and disbursement of funds to schools. "The audit also finds that the management assessment is not well documented and lacks comprehensiveness," says the report.

The audit states the assessment undertaken before the roll out of KESSP was inadequate and should have included an initial audit, and the inventory of infrastructure and annual renewal assessment.

The audit identified a weakness in the complexity of controls to manage the risk of fraud and corruption in the operations of disbursement of infrastructure and capacity building funds.　

The report reveals clear differences in amounts and benchmarks in determining the allocation per school.