City Hall was operating secret bank accounts and may have lost Sh21 billion under Kidero

Nairobi city hall.This was on 5th September 2017.[Edward Kiplimo, Standard]

City Hall operated secret bank accounts and may have lost up to Sh21 billion of taxpayers money under former Governor Evans Kidero, an audit has revealed.

The audit, carried out by KPMG, shows that the county government maintained a huge chunk of its cashbooks in manual format, making it impossible to ascertain the actual financial position of City Hall by the time Dr Kidero (pictured) was leaving office.

The areas that were probed include procurement, revenue collection, human resources, land, assets and bank accounts.

The audit has revealed that City Hall operated at least 32 bank accounts, contrary to the Public Finance Management Act, which requires all county government accounts to be opened at the Central Bank of Kenya.

Thirteen of the 32 commercial bank accounts were not declared during the handover report to the current regime after the August 2017 election. Five of the 13 accounts had about Sh120 million as at August 31, 2017 and signatories included past county officers.

“Further, approximately Sh21 billion in payment made through these banks were not processed in IFMIS and the county did not maintain adequate accounting records to facilitate scrutiny of the related transactions,” said the audit.

Nairobi Governor Mike Sonko said they were still perusing the document and would act upon its findings once a probe was done.

“Everyone who is found culpable will be prosecuted because you cannot steal public money and expect to go scot-free,” said the governor.

The county has been struggling to pay its creditors, who are owed Sh58 billion inherited from the previous regime.

City Hall recently appointed a team to audit all pending bills in order to determine who is owed what.

KPMG sampled 60 pending bills amounting to Sh2.54 billion. Its findings show that supporting documents for 14 transactions amounting to Sh1.1 billion were not made available. In addition, there was no proof of delivery by the suppliers or acknowledgement by the county government in 23 out of the 46 sampled transactions.

“Where supporting documents were provided, anomalies were noted in the procurement process followed in awarding the contracts, including missing requisition memos, procurement committee minutes, quotations and contracts,” said the audit.

“In certain instances where suppliers had issued delivery notes, there was no evidence that the county had received and accepted the goods or services,” it added.

The audit says City Hall used five different financial systems to manage its operations from July 1, 2011 to June 30, 2017.

These were IFMIS (Integrated Financial Management Information System) hosted by Treasury, IPPD (Integrated Payroll and Personnel Database) for staff records and payroll, eJijipay, an e-payment platform, Laifoms (a revenue receipting systems), and Jumbo Link (an online Co-operative Bank link) to making payments.

The audit also identified 7,346 cash collection booklets that were issued to revenue collection attendants, but were later deleted from Laifom.

Kidero team also failed to disclose all the commitments and liabilities that the county had, only listing Sh56 billion.

“County officers could not provide supporting documents for 14 transactions amounting to Sh1.1 billion out of a sample of 60 transactions,” said the audit.

Contacted, Kidero said: “Losing Sh22 billion (the audit figure is Sh21 billion) translates to Sh5.5 billion per year or Sh460 million per month or Sh23 million per working day. Is that possible?”

He said neither him nor the Kenya National Audit Office - the body he said was constitutionally mandated to audit or appoint auditors for public institutions - was aware of the audit.