Senate committee asks EACC to investigate Sh100 million loss in Tavevo Water Company

Investments and Special Funds committee chair Godfrey Osotsi. [Elvis Ogina, Standard]

The Senate County Public Investments and Special Funds Committee has asked the Ethics and Anti-Corruption Commission to investigate financial mismanagement at Tavevo Water and Sewerage Company to the tune of Sh100 million.

The Committee Chaired by Vihiga Senator Godfrey Osotsi called on the anti-graft agency to take legal action against the staff of the Water Company based in Taita Taveta County that will be found culpable in embezzling public funds in the organization.

Senator Osotsi told Taita Taveta Governor Andrew Mwadime who appeared before the committee in Nairobi yesterday that the water company is bankrupt as it is operating on a negative working capital of Sh75.5 million and is besieged with debts to the tune of Sh545 million.

“We are asking Governor Mwadime to work closely with the Ethics and Anti-Corruption Commission to ensure that all those who embezzled funds belonging to Tavevo Water and Sewerage Company are held accountable, since the organization cannot be left to collapse as we watch,” said Osotsi.

The Committee also recommended the recovery of illegal allowances given to board members to be recovered in the next 60 days besides asking for the total restructuring of the board of directors within two months as well as confirmation or recruitment of a substantive managing director.

The decision by the committee came up after Senators raised concerns over several audit queries during the tenure of former Governor Granton Samboja where the water company could only collect Sh262 million in revenue against a target of Sh937.6 million casting doubts on its sustainability.

According to an audit report by the Auditor General for the financial year ended June 2021, the water company was pointed out for ballooned administration costs amounting to Sh390.9 million against revenues of Sh262 million.

“The expenditure includes Sh102.3 million in staff cost and another Sh1.5 million in training expenses which could not be supported, there was Sh6.8 million spent on emolument of board of directors where irregular allowances of Sh790,000 were seen,” said the audit report.

There were also unsupported night-outs claims of Sh450,000 where the payments were not supported with evidence to confirm the night-out claims while the board held 55 sittings out of which 12 were full board meetings contrary to the law which sets the limit at a maximum of six.

Another audit query also centred on irregular composition of committees of the board where each had five members against the requirement of three while the firm was bogged with Sh254.2 million in stalled projects where in one of them, the company paid Sh2.5 million to a contractor before it started.

The Audit Report questioned Sh76.7 million paid for Nyangoro and Maktau water projects even though the works on the project had not been completed while there were unproven legal fees amounting to Sh750,000 where the company could not disclose the nature of legal services offered.

“In 2019, the company had a negative working capital of Sh208.1 million with liabilities of Sh489.1 million against assets of Sh280.5 million while in 2020 the liabilities were Sh441.6 million against assets of Sh366.1 million resulting in a negative working capital of Sh75.5 million,” said the audit report.

Nominated Senator Tabitha Mutinda said that from the audit report it was clear that the Tavevo Water and Sewerage Company is insolvent and depended on continuous support from the Taita Taveta County government and grants from donors which raised questions on its survival going forward.

Governor Mwadime confessed to the challenges in the management of the water company and that his administration was doing everything possible and that he had sent the substantive managing director on compulsory leave after realising some accounts were not balancing to allow for investigations.

The Governor informed the committee that the Managing Director however moved to court and obtained a stay order against the decision and that he also found out that the board was not constituted as per the law as some members were not even qualified to be in the board.

“I would like to inform this committee that since assuming office as Taita Governor, I have tried my best to address the challenges that have been there in the management of Tavevo Water and Sewerage Company and I believe that in the next few months everything will be in order,” said Mwadime.

Tavevo Acting MD Richard Kibeng’o said the firm is paying huge bills including Sh8 million monthly to Coast Water Works Development Agency for bulk water with outstanding bill now at Sh415.6 billion and Sh129.3 million in lease fees besides also paying Sh6 million monthly to Kenya Power as electricity bill.