Plunder by ministries and agencies revealed

Auditor General Edward Ouko.
Just before the Sh791 million National Youth Service (NYS) corruption scandal came to light in 2014, officials at the parent ministry were already mired in another unpublicised scam.

The Interior and National Coordination Ministry, under which NYS falls, had failed to account for Sh93.2 billion in procurement orders, according to a new analysis of the Auditor General’s report for the 2013/14 financial year.

In the same year, the Interior, Education, Transport and Infrastructure, Health, Housing and Lands ministries as well as the Office of the Attorney General could not account for a total of Sh301 billion in allocations from the Treasury.

According to the analysis covering 2013/14, 2014/15 and 2015/16 financial years by independent think tank Institute of Economic Affairs (IEA), the former period saw the worst form of wastage by State entities.

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“When we looked at these reports, the Auditor General explained clearly that the ministries gave financial statements that did not give a true and fair view of the financial position,” said Kwame Owino, IEA chief executive, during the unveiling of the report titled 'Public Procurement in Kenya: Analysis of the Auditor General’s Reports' last week.

Unexplained payments

Auditor General Edward Ouko (below) said limitations encountered by his office while auditing the ministries were major.

A look at the 2014/15 financial year gives the same gloomy story. In that year, the State Department for Infrastructure led in procurement corruption.

The department could not account for Sh63.4 billion meant for its procurement budget, followed closely by the State Department of Education which gobbled up an unexplained Sh53.5 billion.

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Other departments, including Transport, Water, Environment, Foreign Affairs and the National Gender and Equality Commission had Sh194 billion in unexplained tender payments.

More recently in the 2015/16 financial year, the Department of Infrastructure emerged as the main culprit, with an unexplained Sh85.6 billion from its procurement budget.

According to Mr Owino, the findings showed that ministries and other government entities with high expenditure tend to have a high likelihood of experiencing challenges in financial management and adherence to standards of financial reporting.

This leads to a large number of audit limitations, making them unable to give a true and fair view of their financial position.

“The large sums of public funds involved at this level - Sh301 billion in 2013/14 to, Sh194 billion in 2014/15 and Sh86 billion 2015/16 - point to the high risk of loss of public funds in these ministries,” said Mr Owino.

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According to the survey, most taxpayers and institutions that grant financial aid to the government reckon that corruption occurs at the pre-tendering stage where companies are vetted for tenders. The survey, however, takes a different view.

It notes that very few cases of graft were indeed noted during this stage. Instead, the main cases of corruption were identified in the contract management stage or the post-tender award stage. An analysis of the procurement transactions in the Health Ministry, for instance, revealed that out of 63 cases of procurement violations that were identified from the 2013/14 to 2015/16 financial year, on average, a majority (82 per cent), occurred at the post-award stage.

The rest occur at the pre-tendering stage. It’s, however, not all gloom and doom.

In the 2013/14 financial year, independent commissions led the way in the proper management of their procurement budgets. The Ethics and Anti-Corruption Commission (EACC) led the way in accounting for the Sh6.6 billion it was allocated.

Others singled out for praise were the Public Service Commission, Salaries and Remuneration Commission and Office of the Controller of Budget.  

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