Shock as Judiciary fails to account for Sh3b taxpayer money

Some construction projects financed by Judiciary were being undertaken on parcels of land without title deeds. [Courtesy]

Taxpayers could have lost up to Sh3 billion in the Judiciary through dubious payment of bills, honouring of fictitious claims, unexplained expenditures and missing title deeds according to the Auditor General’s report released recently.

There were contractors paid for unfinished construction and a number of fake pending bills worth millions of funds in the Judiciary according to the Auditor General on the Financial Statements for National Government for the year 2015/2016 report.

Auditor General Edward Ouko noted in his report recently that there were questions that shrouded Sh1.3 billion construction of courts across the country. (see separate story)

In the damning report, Dr Ouko claimed there were Sh722 million fictitious payments and expenditures in the financial statements that could not be confirmed.

Audit review

The payment totaling Sh552 million, according to the report was not supported with payment vouchers and therefore the propriety of the expenses could not be confirmed.

Another Sh169 million on Authority to Incur Expenditure (AIEs) for domestic and travel expenses account were recorded as actual expenditure for the item instead of actual expenditure and no AIEs were availed for audit examination.

According to the report, the audit review of eight construction projects at various stations valued at Sh1 billion financed by judiciary revealed that the construction projects were being undertaken on parcels of land that have no title deeds.

This meant that the Judiciary did not have absolute ownership of the land on which the buildings were being constructed. As a result, ownership and valuation status of these parcels of land could not be confirmed.

Away from property, the report noted that in the financial year, Sh291,602,638 cash and cash equivalents as at 30 June 2016 could not be confirmed.

The report raised queries on the balance of Sh291.6 million, which included unpresented cheques totaling Sh191,925,280 that were not provided; Judiciary management did not explain why the cheques were not reversed in the cash book.

Ouko said records showed that another payment totaling Sh7.8 million made to two companies on September 30 2015 and February 18 2016 were not recorded in the cash book and no explanation was provided for the omission by June 30 2016.

Also in question by the report were bank payments worth Sh70.8 million that were not provided for audit verification, Sh20 million receipts in cash not yet recorded in bank statement balance and a similar Sh6 million receipts in bank statement not yet recorded in cash book.

On the Sh659 million that Judiciary claims were transferred to semi-autonomous institutions, Ouko said there were no supporting documents to verify the same.

Further, some of the recipient ministries did not reflect the transfers in their financial statements, therefore raising queries on the accuracy, completeness and validity of the money.

Fake pending bills

Ouko raised issue with the dubious pending bills balance as at June 30 2016 worth Sh203 million that the were not supported with contracts, invoices, local purchase orders (LPOs), local service orders (LSOs), delivery notes and the Judicial Tender Committee Minutes that authorised expenditures.

Notably, management has not explained why the pending bills were not paid although there was a cash balance of Sh291,602,638 as at June 30 2016 that was carried forward to the 2016/17 financial year. “In the circumstance, pending bills balance of Sh202,938,501 is not justified,” reads the report.

On the security contracts for guarding the courts, Ouko said there were unexplained variations on the Sh22 million security contracts entered with Lavington Securities Limited for provision of security services because there was no daily security checklists attached to payment vouchers.

Title deeds

Not left behind was the Social Security Benefits, which the auditor questioned due to a memo that advised that Judiciary makes remittances totaling Sh122 million to the Judicial Pension Scheme be set aside per year for the next 15 years to cater for loss caused by the freezing of past service as advised by the actuary.  

However, according to the report, there was no actuarial report indicating how the amount was computed and why it was not availed for audit review to support the internal memo dated September 8 2009 by the the Registrar, directed the Assistant Director Human Resource.

In the absence of the actuarial report, Ouko noted, the propriety of the expense millions incurred on remittances to the judicial pension scheme during the year ended June 30 2016 was in doubt.

Ouko’s report noted that the Judiciary owns buildings, land and various assets, including vehicles, furniture and computers throughout the country but at the time of the audit, the Chief Justice David Maraga’s team was updating its asset register and procuring titles for its parcels of land across the country.

In the absence of title deeds and a complete asset register the Auditor General noted, the security and ownership of the assets owned by the Judiciary cannot be confirmed.