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Kenya Railways loses millions in illegal SGR payments

By Nzau Musau | December 6th 2015

The Kenya Railways Corporation (KRC) may have lost half a billion shillings in the land acquisition programme for the Standard Gauge Railway (SGR) project, an internal audit has revealed.

According to the draft report of a joint audit between the Kenya Railways Corporation Risk and Audit Department and the National Lands Commission (NLC) Audit Department, the biggest single transaction faulted by the audit is what auditors called a “subjective sisal plantation valuation”.

It involved two sisal farms that produced a variance of Sh337 million. One plantation of 8,990 hectares in Kibwezi was compensated at Sh1.5 million per hectare while a 4,800 hectare at Voi was compensated at Sh24 million per hectare.

The former was “fairly well kept” while the latter was “poorly managed with overgrown weeds” according to the auditors.

“Though minimal variance was expected between the two sisal plantations may be due to their distance from each other, remaining lease period if applicable and how they were kept, the noted variance of Sh337 million was material, thus implying subjectivity in the valuation process.

The Voi plantation with half hectares than the Kibwezi one and poorly kept, ended up getting Sh359 million while Kibwezi got Sh50 million for their expansive and well-kept farm.

In the second biggest payment questioned by the auditors, Sh61 million may have been paid to 36 ghost Project Affected Persons (PAPS) in Manyani area.

According to the auditors, KRC had provided a list of 57 tenants of their Manyani land who were to compensated for their developments on KRC land. However, when payments were done, 78 persons benefited.

“We have not been able to establish whether the noted variance is as a result of fictitious PAPs or sub-leasing by TOL tenants, which is not allowed as per the tenancy agreement,” the audit said.

The audit also established indicators of over-valuations where a three or four bed-roomed residential house sitting on 0.164 hectares and built on brown-baked bricks and iron sheets was compensated at Sh9.2 million.

A church in Sultan Hamud was paid Sh10.5 million for demolition of their iron sheet structure and the pastor's office.

In Mtito Andeli, the auditors found that Sh43 million may have been paid to undeserving people.

Persons illegally occupying public land, including cemeteries were paid off compensation for both the land and the development thereon according to the draft audit document in our possession. The auditors say they later found out that the list of affected persons submitted to the NLC was coordinated and compiled by the area MCA while the SGR committee appointed to conduct the identification process was ignored.

One lady, for instance, was paid Sh2.5 million for a 0.96 hectare PLOT NO Shauri Moy0/97 meant for a cemetery while two ladies, presumably sisters were paid Sh3.3 million for 1.1 hectare plot- Mtito Andei/Muungano/17 meant for slaughter, sewage and refuse disposal facility.

Some Sh40 million plus was paid out to persons whose authenticity was questioned by the auditor.

The details in the NLC master schedule of beneficiaries differed with those in the KRC payment schedules.

It became difficult to establish whether the beneficiaries were one and the same persons.

About Sh22 million was paid out to persons whose houses were earmarked for demolition for being illegally built on Kenya Railway Reserves in Manyani and Mbololo.

In the same measure, about Sh15 million was spent on persons whose details in the payment schedule were incomplete. Most beneficiaries had single names like Nzioki, Nthenge, Musenya, Wanjiru, Nyerere or they were simply unknown.

Others were paid a total of Sh11 million although they were not listed in the NLS master schedule of beneficiaries. In yet another curious case of variance between the NLC schedule and payment schedule, a fellow who was supposed to receive Sh1.5 million compensation ended up pocketing Sh10 million. There were also notable cases of equivalent compensations for differing sizes of acquired land.

The undated and unsigned audit report was prepared by Sammy Kariuki and reviewed by Remmy Koech.

Yesterday, the NLC defended its role in the SGR compensation, saying the process has been above board. NLC vice chair Abigael Mukolwe, a registered land valuer herself, said the process was largely misunderstood.

“For a start, it may be important to get the final report. In the process of valuation, the initial queries are answered, more often than not. It is possible all the issues raised therein have been satisfactorily answered. It is also possible that they have not been answered fully,” Mukolwe explained.

However, she said the process has generally been characterised by cases of multiple claimants and the commission had an arduous task of establishing the genuine beneficiaries.

He said the Commission has in the process, cancelled many fake titles.

She said the Commission has nothing to hide in as far as its role in the acquisition process is concerned.

“Ours has been a ground verification, feet by feet exercise. Our people have walked the entire length of the railway on feet establishing these things,” she said.

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