Treasury in Sh10b suspicious county expenditure

Murang'a Governor Mwangi wa Iria, Council of Governors chairman Wycliffe Oparanya and Kiambu Governor Ferdinand Waititu in Nairobi on May 7, 2019. [David Njaaga,Standard]

Governors have accused Treasury of sneaking in some items in county budgets without their knowledge.

At the heart of the dispute is the whereabouts of an estimated Sh10 billion which was irregularly approved and supposedly spent by counties, but which governors of affected counties have disowned.

After a crisis meeting chaired by the Controller of Budget, Council of Governors chairman Wycliffe Oparanya said the affected counties did not “budget, receive or spend monies” on suspect items such as the South Sudan peace process, State House affairs and Free Primary Education.

The governors now suspect that someone may have illegally spent the funds before attempting to conceal the misappropriation by lumping the expenditure on the counties.

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“The Council of Governors wants to know who spent the money if indeed the money was spent,” said Governor Oparanya.

“Since the county governments did not spend the money, who spent the it? Is someone somewhere siphoning counties' funds through fake entries? This is utmost fraud that needs to be unearthed. This money was not spent at the county level,” he said.

Oparanya's Kakamega is among the 11 counties caught up in the storm.

He said it was difficult at the moment to explain how the money was spent and that the Integrated Financial Management Information System (IFMIS) produced the affected financial statements.

"The first point where we are narrowing our issues is the IFMIS that is giving us this financial statements. Was this a mis-posting, integration problems between the national and county governments?" Oparanya posed.

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In a separate statement, Kirinyaga Governor Anne Waiguru, whose county is also affected, was more blunt, laying the blame on National Treasury.

"I demand an immediate public apology by the National Treasury, the resignation of the IFMIS director and a public statement to correct public understanding on this matter," said Ms Waiguru.

Treasury's statement

She cited Treasury's statement on Monday to all County Executive Committees (CECs) for Finance stating that “some counties have been running the wrong report for budget execution by programmes and sub-programmes leading to wrong descriptions of their programmes."

She said this was an acknowledgement by the National Treasury that it was indeed a misreporting on IFMIS that has affected the budget expenditure reporting in eight counties.

"I wish to advise the Director IFMIS and National Treasury officials that Kenyans are watching their conduct. Any attempt to intentionally misuse IFMIS to mislead through disinformation and falsely allocating blame to County Executives thereby exposing them to distracting witch-hunt will not be countenanced," Waiguru said. 

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She said by failing to proactively clarify the matter in the interest of the public’s right to be informed, there was a clear intention to mislead the public, subvert transparency and accountability in public finance and create political mischief to hoodwink Kenyans.  

“By failing to take responsibility for this anomaly in the IFMIS and the consequent public misinformation, the need for public correction and clarification on the same, the ministry and Director IFMIS exposed County Executives and County Governments to loss of public trust, humiliation and gross embarrassment,” she said.

Her sentiments were shared by Oparanya who said Rotich should issue a public statement to clear the air. 

Oparanya indicated a resolution buy CoG to request Senate to suspend all summons issued to Governors over the spending of the last financial year.

Irregularities, including budget items purporting to fund, among others, State House Affairs were errors introduced by the Integrated Financial Management System (IFMIS), the county bosses claimed.

Financial statements

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The matter came to light last week during the grilling of Kiambu Governor Ferdinand Waititu by the Senate, when the suspect allocations in excess of Sh1 billion were uncovered in the county's financial statements. 

Oparanya had led his colleagues Amason Kingi (Kilifi), Ferdinand Waititu (Kiambu) and Mwangi wa Iria of Murang'a in a meeting with the Controller of Budget Agnes Odhiambo and Treasury officials to thrash out the matter.

Separately, Nyamira Governor John Nyagarama also denied reports that his government had appropriated suspicious expenditures of national government budgets.

Nyamira, according to the budgets generated from IFMIS, had appropriated a total of Sh459 million for the votes of primary education, Statehouse functions, cabinet functions and coordination of ministries, departments and agencies.

Nyagarama also blamed the National Treasury for the financial misrepresentation which he termed as an anticipated error.

"We anticipated the errors as the Council of Governors when we said the IFMIS would mess us, it is now coming out very clearly," he said.

Laikipia Governor Ndiritu Muriithi said his government had flagged errors generated by IFMIS mid-last year. He said that on August 16, the county wrote to the IFMIS director alerting him of the errors on the system-generated trial and balances and unaccounted transactions.

The governor said that in a response on February 22, this year, the IFMIS director confirmed that there was a configuration issue under Laikipia County, which resulted in the system generating erroneous reports.

“Now that the PS National Treasury and his director IFMIS have confirmed that the system has generated erroneous reports, Auditor General Edward Ouko, who in the past has also publicly expressed doubts about the IFMIS system, should expunge the annexures and any conclusions derived from audit reports,” said Muriithi said in a statement yesterday.

But Treasury has indicated that it will not be cowed to apologise and instead threw the ball back to the governors, accusing counties of negligence in budget-making.  

Kamau Thugge, the Principal Secretary of the National Treasury, had indicated in a statement issued Monday that the counties were at fault and that it was the duty of Finance executives to ensure the budget items are captured accurately.

Governor's meeting

Lawyer Peter Wanyama for CoG, indicated that when he earlier met Oparanya in Kisumu and discussed the problem in detail, it emerged that Treasury had confirmed that there was mix-up in the printing of the budgets.

It is these erroneous budgets that were subsequently uploaded into IFMIS for several counties -Kiambu, Laikipia, Kakamega, Kitui and Nyeri.

“The computer picked components of the National Government budget by error and included them in the county budgets during the printing,” said Wanyama.

“That (mix-up) is what happened. It explains why in the main audit report the queries are not raised by Ouko. The error is contained in the budget that was printed from the IFMIS system and attached to the audit report,” he said.

He explained that in public finance management, it was not possible for a county government to allocate money to national government functions and subsequently spend it.

“The budget of a county government is heavily scrutinised by the budget committee of county assembly. After this it is subjected to public participation and an appropriation bill is prepared and signed into law,” he said.

Wanyama said the Controller of Budget is fully involved in the budgeting process

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Controller of BudgetCouncil of GovernorsGovernor Ferdinand WaitituTreasury