How taxpayers' Sh10 billion went down the drain

One of the aircraft unveiled by the late Internal Security Cabinet Joseph Nkaissery in 2016. A police aircraft crashed four months after it was acquired but no compensation claim was made. [Wilberforce Okwiri, Standard]
A report by the Auditor General has exposed white elephant projects that gobbled up Sh10 billion of taxpayers' money. More intriguing is that some of the projects were never executed or have stalled yet payments were made.

In his latest report, Edward Ouko, shines the spotlight on dodgy projects into which public funds were sank, some dating decades ago like the fertiliser factory that was never built despite Sh6.3 billion expenditure. It also cites nearly Sh1 billion spent on the renovation of two Kenyan embassies abroad, one which developed cracks soon after completion.

The report raises concerns that Sh2.2 billion was lost after an Augusta Westland AW-139 Helicopter (5Y-NPS) crashed four months after it was acquired, yet no accident report was provided to facilitate compensation.

Failure to provide required warranties for avionics made it impossible "to determine whether the helicopter was new or refurbished."

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There is also the Sh2.7 billion spent on purchase of military aircraft that never flew, seven of which would later be dismantled for spare parts.

Of concern is the Sh6.3 billion squandered on loans for Ken-Ren Chemical and Fertiliser; a project which never took off under the Ministry of Agriculture.

The statement of outstanding public debt reflects principal loan amounts of Sh1.8 billion and Sh3.5 billion in respect of Government guaranteed debts incurred in 1970 on account of Ken-Ren Chemical and Fertiliser Company, with the loans being advanced by the Australia and Belgium governments respectively.

The total principal of Sh5.4 billion plus interest amount of Sh887.3 million were fully repaid in the financial year 2014-2015.

“It is a matter of concern that Sh6.3 billion was incurred on a project which did not take off and against which no value for money was achieved,” reads the report.

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The cost of the procurement of aircraft, related services and spare parts cost the taxpayer Sh498.1 million, but the aircraft are now being used as source for spare parts.

The report shows Ministry of Defence procured aircraft from Royal Jordanian Airforce  and several contracts for the purchase price of the Aircraft Sh1.5 billion ($15,291,503) and another contract for technical assistance and maintenance services for Sh1.2 billion ($12,264,995).

A direct procurement of supplementary services for the fleet was signed on January 30, 2009 for Sh292.2 million ($ 2,883,562).

However, details of the services have not been provided for audit review, contrary to the provisions of the Public Audit Act.

Records show that the aircraft was delivered, assembled and tested but an inspection undertaken by the ministry’s technocrats revealed a number of defects.

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Spare parts

In addition, the records further show that the ministry procured aircraft spare parts at a cost of Sh1.3 billion ($12,956,827) on an unspecified date from a firm through restricted tendering instead of procuring directly from the specific aircraft manufacturer.

“It was not possible to confirm under the circumstances, whether value for money was obtained in the procurement of these spare parts or whether payments for the spare parts were lawful and effective as required under Article 229(6) of the Constitution.”

An audit verification of the aircraft carried out at Laikipia Air Base shows that the defects identified at the time of the delivery of the aircraft had not been rectified as at the date of inspection and that the audit of fuel and servicing records indicated that seven aircraft have not been operational from the time they were procured.

Under the Ministry of Interior, the report reveals that Augusta Westland AW-139 Helicopter (5Y-NPS) the Kenya Police helicopter was registered in April 2016 and crashed in September the same year at a time when the helicopter should have been under warranty.

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However, further investigations could not be carried out on the loss arising from the accident as required due to lack of accident report.

“In the absence of the accident report, it is not possible to categorise the loss of helicopter in terms of natural cause, technical or pilot’s error, the basis upon which the loss could be recovered. No explanation has been given for failure to release the accident report by the Cabinet Secretary in accordance with Regulation 18(1) of Civil Aviation (Aircraft Accident and Incident Investigation) Regulation 2013,” reads the report.

Under the Ministry of Defence, the audit report shows that a contract for construction of a building for food processing factory at Kenyatta Barracks, Gilgil at a cost of Sh459.9 million was never completed.

The Defence ministry awarded another contract to the same contractor for civil works at the same factory at a tender sum of Sh30 million, but an audit inspection of the site undertaken in June 2016 revealed the contractor abandoned the works and a sum of Sh22.6 million had been paid to the contractor.

Foot paths

“Although the contract period had elapsed, there were outstanding works including road works, landscaping, foot paths and storm water drainage works for which the ministry has not acted in accordance with conditions of the contract,” said the report.

The audit further established that the ministry entered into a contract with another firm for supply and installation of food processing equipment for Sh373 million.

The equipment had, however, not been delivered as at the time of the audit inspection despite the firm having been paid the entire contract sum.

At Embakasi Garrison, records indicate restricted tendering was used to award a contract for single accommodation at a cost of Sh316.9 million, but an audit inspection in July 2016 revealed the contractor had already been paid Sh265 million.

taxpayersAuditor GeneralcorruptionEdward Ouko