Massive corruption and excessive and unaccounted-for spending are the wholemarks of a report by Auditor General Edward Ouko on the Counties.
According to the damning audit report for financial year 2014/15, a huge chunk of the monies was paid to ghost workers or fictitious firms. But the governors have hit back and are blaming the Integrated Financial Management Information System (IFMIS) for loss of funds.
During a meeting at Whitesands Hotel in Mombasa yesterday, the governors said the system should be done away with.
Bank accounts of five county governments have been hit by cyber-heists, with fraudsters stealing hundreds of millions of shillings, governors have claimed.
Governors yesterday said Kilifi, Siaya, Kakamega and Kitui bank accounts have been affected and money stolen through the Integrated Finance Management Information System (Ifmis).
The governors now want Ifmis suspended and blame its managers and some officers of Central Bank of Kenya (CBK) of working in cahoots with fraudsters and county officials to siphon money from county governments.
Yesterday, the Council of Governors (CoG) called on all the 47 county governments to carry out an audit of their accounts at CBK.
The fears of the theft of the money engulfed the county bosses attending a conference in Mombasa in the wake recent revelations that Kilifi county government lost Sh51 million through internet fraud.
Nine governors who spoke at Mombasa's Whitesands Hotel yesterday said that the Ifmis system was forced on the counties and called on its architects to take responsibility over the mess.
Financial shutdown
They warned that if the system is not properly secured, the country will sink into a financial shutdown where monies meant for services delivery will be stolen.
"Random sample from 47 counties shows that in addition to Kilifi, Siaya was able to avert Sh80 million worth of payment in the 2014-2015 financial year which was being effected through hacking. Eventually, they lost Sh4 million in the scam," said CoG chairman Peter Munya.
Munya who is also the Meru governor, said they want the system either assessed for effectiveness or shut down and the government to look for the alternative.
He said that they cannot also rule out collusion between the county officials and Ifmis officers and CBK officers to steal from the counties.
"The council proposes that there was need for a forensic audit on all county revenue fund accounts, development and operational accounts domiciled at the Central Bank of Kenya to establish the exact status of the funds," said Munya.
Between September 29 and October 3, Kilifi County lost Sh51 million through the system after 10 passwords were used to fraudulently transfer the money to Nairobi-based firms.
Kilifi Governor Amason Kingi has since named the firms that money was allegedly siphoned to and suspended 10 officials whose passwords were used in the scam.
In July last year, Garissa county assembly members also raised a red flag over what they termed "theft of Ifmis passwords by fraudsters out to siphon money from the county".
Yesterday Kitui Governor Julius Malombe said his county also lost Sh4 million through the hacking of the system and 18 individuals have since been charged.
He said it was apparent that passwords of county officials can be used by corrupt CBK officers without owners being aware to siphon the money.
"We are demanding a forensic audit on the county governments' account at the Central Bank to determine whether more public funds may have been lost. It is a serious matter," said Malombe.
Wajir County Governor Ahmed Abdullahi said counties have no powers to allocate passwords to its employees to access the Ifmis, adding that there were questions of accountability at the CBK and Ifmis headquarters over the management of the systems and county accounts.
''The extent of the problem (hacking of Ifmis) both at the counties and national government could be shocking if reports of theft through this system is anything to go by," said Abdullahi.
Cautions politicians
Taita Taveta Governor John Mruttu cautioned politicians to desist from politicising the matter and give the relevant agencies time to complete investigation.
He said that the cybercrime was problem affecting even blue chip companies and other advanced nations and that it should not be trivialized for political expedience.
"We are seeing a sustained campaign to depict ODM run counties as the most corrupt. Let us be objective and factual on these issues if we are sincere in the war against graft," said Mruttu.
Munya said counties have no guarantee that the system is secure from cyber-crime or internal manipulation by the system administrators at the national level.
