Auditor General: State illegally withdrew Sh6.3 billion from Consolidated Fund

Auditor General Nancy Gathungu. [Samson Wire, Standard]

Auditor General Nancy Gathungu has detailed how Uhuru Kenyatta's administration in the sunset days of his reign withdrew Sh6.3 billion from the Consolidated Fund without the approval of Parliament.

Gathungu blamed the Treasury for the withdrawal of the funds.

In a report to Parliament, Gathungu explained that the funds were allegedly withdrawn for the buying of shares in the Eastern and Southern African Trade Development Bank and Africa-Export Import Bank (Afreximbank) in the 2022/23 financial year.

According to the Special Report on the Supplementary Budget Expenditure including withdrawals under Article 223 of the Constitution, the shares at Eastern and Southern African Trade Development Bank were worth Sh1,296,757,668 and those at Afreximbank Sh5,013,200,450.

The Auditor General was concerned that the Treasury exploited provisions of Article 223 of the Constitution which allows the government to spend money which is not approved by Parliament “if an amount appropriated for any purpose by the National Assembly is either insufficient or a need has arisen for a purpose for which no amount has been budgeted.”

“The information on the shareholding of Afreximbank was received after the special audit report was submitted to the National Assembly. We are however yet to get a response to our request on the Eastern and Southern African Trade Development Bank shareholding. We will have to confirm this with Treasury,” said Gathungu.

The MP John Mbadi-led committee heard that the Auditor General was thus unable to verify the purchase of the shares and was also unable to determine whether the shares were beneficial to the government.

Deputy Auditor General Sylvester Kiini, who appeared before the House team on behalf of Gathungu, reiterated that the Treasury purchased the shares in the regional banks by invoking the powers of Article 223.

The Auditor General also raised the red flag over the continued increase in requests for funding under Article 223 of the Constitution in the recent financial years.

The Auditor General report showed that since the 2014/15 financial year, the money requested had increased from Sh1.1 billion to Sh147.39 billion in the 2022/2023 financial year.

“This represents a percentage increase of 13,299 over the nine years,” she said.

“Further, between the financial years 2014/15 to 2022/23, the national government had already spent between 0.4 per cent and 67.8 per cent of the funds requested,” she added.

It also emerged that the requests for funding under Article 223 of the Constitution had been made by five Ministries, Departments and Agencies (MDAs) approved by the Controller of Budget.

Their details were however not disclosed in the correspondence from the Treasury. It was also shown that the requests amounted to Sh5.13 billion for recurrent expenditure and Sh2.8 billion for development expenditure.

Nominated MP Mbadi claimed that unscrupulous officials at the Treasury, Ministries and Departments were now perpetrating budgeted corruption and had turned the state offices to a crime scene.

He further intimated that MPs were working on introducing legislation that would guide the expenditure of funds requested under Article 223.

“…It requires that before expenditure is incurred under Article 223, approval of the National Assembly is granted within one week. Should the House not approve the withdrawals, the Treasury can then draw from the Sh10 billion Contingency Fund,” added Mbadi. 

The special report was as a result of the scrutiny of the budgeting and procurement process in relation to supplementary expenditure incurred under Article 223 of the Constitution by the Auditor General as part of the new structural benchmarks for Kenya under the International Monetary Fund Extended Credit Facility Program.