CS Henry Rotich defends altering laws to allow cash to be held in US account

Controller of Budget Agnes Odhiambo and Treasury CS Henry Rotich responds to questions raised by the Public Accounts Committee at Parliament building. (Photo: Boniface Okendo)

MPs have accused Treasury Cabinet Secretary Henry Rotich of altering laws to allow the irregular payment of funds raised last year through the issuance of the Sh275 billion Eurobond and kept in offshore accounts.

In a meeting with the National Assembly's Public Accounts Committee it was revealed that Mr Rotich relied on two amendments to sidestep the Controller of Budget in the settlement of a Sh53 billion syndicated loan directly from a bank account in New York.

Payment of the loan from the JP Morgan Bank account has become a hot potato in the Government with Controller of Budget Agnes Odhiambo denying that her office approved the settlement.

"I read mischief in this whole issue. I do not think the Rotich was genuine in the amendments that are now clearly mischief to violate the Constitution," Mbalambala legislator Abdikadir Mohamed said.

Committee Chairman Nicholas Gumbo said the proceeds from the Eurobond were not remitted to the Central Bank of Kenya immediately, saying that the funds would have attracted interest rates.

Rotich presented a breakdown of the bank statements that showed the State earned about Sh14 million in interest in the three months before the funds were repatriated to local accounts. "That amount is too little," Mr Gumbo said of the interest earned.

The CS told the committee there were amendments to the Central Bank Act and the Public Finance Management Act, allowing exemptions on specific expenditures that could be met from offshore accounts. "These exemptions are now anchored in the law, and it is legislators who passed that same laws," Rotich said.

It became clear for the first time that Kenya was operating 15 offshore accounts, with Chief Accountant Bernard Ndung'u and his deputy Julius Kilinda as the only signatories.

The two men signed off the payments from the New York bank. Ms Odhiambo was hard-pressed to explain whether she had approved the loan repayment, saying her office had been approached to check if the credit facility issued by Standard Bank, Standard Chartered and Citi Bank, should be paid.

"My signature was not used to make the payments from the JP Morgan account because I am not a signatory to offshore accounts," she said.

She had however, approved more payments to ministries and departments, estimated at Sh204 billion in development budgets – most of which were part of the proceeds of the Eurobond.

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