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Parliament recommends prosecution of PSs over misuse of public funds

By Rawlings Otieno | November 15th 2018
National Treasury Principal Secretary Kamau Thuge when he appeared before the Parliamentary Accounts Committee (PAC). [Gideon aundu/Standard]

A parliamentary committee wants action taken against principal secretaries and parastatal chiefs accused of wasting public resources.

The Public Accounts Committee (PAC), in its report tabled at the National Assembly yesterday, directed the Ethics and Anti-Corruption Commission (EACC) and the Directorate of Criminal Investigations (DCI) to probe and punish those found to have mismanaged public funds.

According to the report by the committee, EACC and DCI should reprimand National Treasury PS Kamau Thugge, former Health PS Khadijah Kassachoon and former Roads PS John Mosonik over their alleged failure to adhere to accounting standards.

Also in the list is former Interior PS Monica Juma, now the Cabinet secretary for Foreign Affairs.

In the report for the audited accounts of the 2014-2015 financial year, PAC wanted action taken against the accounting officers for failing to adhere to the Public Procurement and Asset Disposal Act as well as the Public Finance Management Act.

“Mosonik, the erstwhile accounting officer of the entity, should be held liable for making payments of Sh292 million and Sh100 million for 2013-14 and 2014-15 respectively without original receipts,” read the report.

“He should further be held liable for making refunds totalling Sh55 million in 2014-15 to contractors without proof of completion of works contrary to the PFM Act 2012.

PAC also wanted EACC to expedite investigations of irregularities in retention of funds for the 2013-14 and 2014-2015 financial years with a view to prosecuting those involved in misuse of public funds.

The committee noted that the tender for comprehensive group life insurance cover to members of the National Police and Prisons services was awarded at Sh1.7 billion and the lowest bidder who had offered the services for Sh629 million ignored.

To defeat audit trail, an unsigned bank guarantee of Sh3 million was issued by another bank on May 28, 2014, to cover the shortfall of Sh2 million. No reason was given for the omission.

The accounting officer submitted that the ministry awarded a tender for the insurance cover for the National Police and Prisons services at Sh1.7 billion.

The lowest priced bidder, British American Insurance Company (K) Ltd, was found to have failed to follow the law. The form of the tender was not duly completed and the organisation’s capacity and its name was not indicated.

“The accounting officer during the year under review, Monica Juma, should be reprimanded for introducing a new criterion during evaluation and comparison of tenders and proceeding to cancel the tender for lowest bid contrary to Public Procurement and Disposal Act and the Public Finance Management Act,” said the report.

PAC also found that the State Department of Interior did not submit minutes of the meeting of the Ministerial Tender Committee in support of its submission for award for audit review or verification.

According to PAC, it was not able to verify that the award of the contract complied with the law.

“EACC and DCI should investigate the entire procurement process. They should establish whether there was a breach of the procurement laws and allow for prosecution, if evidence permits,” read the report.

The committee has also indicted Dr Kassachom, saying there was no value for money in respect to the expenditure of Sh501, 574,915 incurred for upgrading Othaya District Hospital Phase I.

PAC asked EACC and DCI to investigate the entire procurement process, the public officers and the construction firm involved to establish if there was a breach of the laws.

“Where no satisfactory explanation provided to the National Treasury CS and the Auditor General within the stipulated time, Ms Khadijah Kassachoon should be surcharged with Sh93, 541,451.45 being expenditure incurred without lawful authority,” read the report.

It directed that Kassachoon liaise with the substantive accounting officer to provide an explanation to the Auditor General for incurring wasteful expenditure on behalf of the Government within three month of adoption of the report.

Pending bills

PAC also wanted Dr Thugge to take responsibility for the accumulation of pending bills totalling Sh632 million by the National Treasury in one financial year. This demonstrated fiscal policy failure and the inability of the officers to ensure proper management and control of, and accounting for the finances of the national government, said the report.

The committee noted that Thugge was responsible for releasing money to other ministries, departments and agencies but failed to manage pending bills in his own entity.

“The reason advanced by the accounting officer that the pending bills were mainly due to late submission of invoices from suppliers was not satisfactory to the committee. Other accounting officers attributed pending bills in their entities to lack of or late release of exchequer from the National Treasury which is a symptom of cash flow management problem in Government,” read the report.

“The accounting officer, Dr Kamau Thugge, should be reprimanded for accumulating pending bills totalling Sh632, 331,850.00 at the National Treasury in 2014-2015 financial year.”

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