A parliamentary committee has rejected two payments that the National Treasury made in the last days of the Jubilee administration.
The government paid Sh6 billion to Helios Investments for the company’s 60 per cent stake in Telkom Kenya just before the General Election in August, which resulted in the Treasury assuming full ownership of the telecommunications company.
It also paid Sh4 billion for the maize flour subsidy, which was meant to cushion consumers against the high cost of food.
But the Budget and Appropriations Committee recommends that Parliament rejects the transactions, which had been done without its approval.
The government had invoked Article 223 of the Constitution that gives the Treasury the greenlight to spend money without approval by Parliament in certain circumstances, but seek authority later.
But the committee says the payment to Helios was not an emergency and that the government could have waited and sought clearance.
“The payment of Sh6.09 billion for the exit of Helios Investment from the shareholding of Telkom Kenya Ltd be rejected as per the recommendation of the Departmental Committee on Finance and National Planning,” says the committee chaired by Kiharu MP Ndindi Nyoro in its report on the first Supplementary Budget to the National Assembly.
The committee notes that there was no justification provided for such payment under Article 223 and why the payment could not wait for the normal budget process.
"The committee raised the matter with the National Treasury and the Controller of Budget and it was noted that there was need for further inquiry into the payment.”
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The government also cited Article 223 to pay Sh4 billion for the maize flour subsidy.
The Kenya Kwanza administration, the committee noted, has also made several expenditures under Article 223.
These include Sh10.2 billion to operationalise the Hustler Fund and Sh3.73 billion for the fertiliser subsidy programme.
The committee further recommends the review of the Article 223 of the Constitution, noting that it has in the past been subject to abuse.
It also wants the Auditor General to investigate instances in which the Article may have been abused over the current financial year.
“That a multi-agency team, comprising of the Budget and Appropriations Committee, the National Treasury, the Controller of Budget, the Office of Auditor General, the Attorney General be established to undertake a legislative review of Article 223 of the Constitution for clarity and to enhance fiscal prudence with regard to expenditure under this Article and report to the National Assembly by June 30, 2023,” says the committee.
“That the office of the Auditor General undertakes an audit of expenditures granted under Article 223 of the Constitution for 2022-23 financial year and reports to the National Assembly by June 30, 2023.”
Leader of Minority Opiyo Wandayi, however, differed with the recommendation to review the law.
He said the committee should instead have named the State officials who had abused Article 223 and also made recommendations on how the government can go about recovering the funds that may have been lost.
“Article 223 of the Constitution is quite explicit. It provides for circumstances where you can spend public funds without the requirement without an appropriations Act to support it."
"The Public Finance Management regulations have even made it clearer...What it calls for is discipline not further tinkering with the regulations or the Constitution,” Wandayi said.
The National Treasury at the time of the controversial payments was headed by Cabinet Secretary Ukur Yatani and Principal Secretary Julius Muia.
“When you recommend that the payment of these monies be rejected, you should go further and say what you want us (Parliament) to do. If you are the cause of public loss, you can be compelled to make good that loss. In this case, who are we going to compel to make good any possible loss?”
“Is it the Cabinet, the CS, the Controller of Budget who authorised the money to be withdrawn? The committee should have gone further…let us as a House put our foot down and say that Article 223 must be applied where necessary and in strict compliance with the Constitution.”
A recent court ruling said Ministry of Lands officials who conspire with grabbers to steal public land will take personal responsibility for paying for the damages.
Environment and Lands Court judge Lucas Naikuni made the declaration in a case where he ordered former Commissioner for Lands Sammy Mwaita to pay Sh5 million for facilitating the transfer and grabbing of a government house in Mombasa valued at Sh70 million.
"As the then Commissioner of Lands who facilitated the fraudulent transaction of public property to a private entity, the court orders that he personally pays Sh5 million as damages for breaching public trust by dishing out public land to private persons,” the judge ruled.
Justice Naikuni also ordered the two companies that benefited from the fraudulent transfer of public property, Bernsoft Ltd and Equitronics Ltd, to pay Sh30 million in general damages for denying the government use of the property for the public benefit for 22 years.
Finance and National Planning Committee Chairman Kuria Kimani said the money that the government spent in buying out Helios could have been spent in more impactful areas including hiring of teachers.
“The Sh6.1 billion that was hurriedly withdrawn during elections was enough to employ 30,000 teachers," he said.
"When you recruit a teacher, you are not just employing the 30,000 teachers, you are recruiting taxpayers, they will also improve the livelihoods of their families.”