Audit shows millions lost in liquor licencing fraud at Nacada

By Mwaniki Munuhe

Nairobi, Kenya: Details have emerged of how taxpayers may have lost millions of shillings in fraudulent dealings at the National Authority for the Campaign against Drug Abuse (Nacada).

The Standard is in possession of documents that point to what appears to be a well-orchestrated scam revolving around liquor licencing.

The scam involves faking of banking slips, failure to submit licence book serial numbers for verification and failure to submit money collected as charges for liquor licences to the authority.

According to an internal audit report seen by The Standard, Nacada has lost in excess of Sh10 million in one district alone, with the total amount being unaccounted for and varying from one district to the next.

The scam is captured in a report titled ‘Internal Auditor Report (Nacada), Management of Alcoholic Drink Revenue Collection in the Districts.’

Even more disturbing, the report reveals that Nacada officials even forged bank slips.

“Embakasi District Clerk submitted twenty three fake Co-operative Bank deposit slips totaling  Sh1,260,000, accompanied by respective duplicate alcoholic drink licences. The monies could not be traced in the bank statement and the bank confirmed that the slips were forged,” reads part of the report.

Slips withheld

In other cases, officials either declined to submit slips for revenue collected or withheld license book serial numbers to make verification and accountability difficult.

“The district clerk (in Migori) failed to avail/produce alcoholic drink license serial number 20950 to 21000 (Form 7) for physical verification. She indicated it was lost by a former district commissioner. Kisii Central District did not account or avail bank deposit slips totaling Sh3,031,000 earned from issued alcoholic drink licences and applications fees. Included is Sh363,000 collected in cash against alcoholic drinks regulations,” reads the report in part.

Speaking to The Standard, Nacada Chief Executive Officer William Okedi admitted that money had been lost.

He further indicated that although some of the money previously thought to have been lost had been recovered, his office has written to the Criminal Investigations Department and Ethics and Anti-Corruption Commission to probe some of the cases.

“Working closely with the Principal Secretary, we have written to both CID and EACC to assist in cases that we feel involved open theft. We have, however, recovered some of the money. We have also taken administrative measures against some officers and their cases are already in court as we speak,” he said

The report indicates that although Embu District collected Sh10,266,000 in liquor fees, the money was never submitted to the authority.

“Embu West District clerk had in her possession alcoholic drink fees totaling Sh10,266,000 in form of bank deposit slips that had not been submitted to Nacada,” reads part of the report.

Former Nacada Chairman Dr Frank Njenga Wednesday confirmed that there were allegations of corruption in the collection of fees, but was quick to add that the graft was not systematic.

“There were allegations of corrupt elements at the collections but it was not reported as systematic fraud. This is a matter I believe is being handled administratively. The CEO and the board should, however, be in a position to provide a clear explanation, “he said.

In some cases, alcoholic drinks licences charged were not in tandem with the Provision of Alcoholic Drinks Control (licencing) Regulations.

In other cases, alcoholic drink applicants were issued with different types of licences from the ones they applied for, an indication of connivance.

The Audit and Risk Committee recommends initiation of investigations by the Director of the Criminal Investigation Departments (CID), Ethics and Anti-corruption Commission and Anti-Banking Fraud unit into possibility of embezzlement of funds.