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NAIROBI: The National Treasury spent Sh53 billion to pay syndicated loans from offshore special accounts contrary to the requirements of the Public Finance Management Act.
Controller of Budget (CoB) Agnes Odhiambo told the National Assembly's Public Accounts Committee (PAC) that she did not approve the Sh53.2 billion pay off.
The money was gotten from the Eurobond proceeds.
"The billions were paid from the offshore accounts thus the money was not first deposited in the Consolidated Fund for approval by the Controller of Budget. I did not approve the payment," said Ms Odhiambo.
She added:"CoB does not give approval unless through a written document. I cannot speak for the National Treasury."
She told the MPs that the Public Finance Management Act allows the Cabinet secretary for National Treasury to open a National Fund but approving the withdrawal of such money must be done by CoB.
She said her office only approves payment of debt after assessing the documents including loan agreements.
CoB is mandated to approve the release of funds from the Consolidated Fund in conformity with Article 206 (4) of the Constitution, which sates that "Money shall not be withdrawn from the Consolidated Fund unless the Controller of Budget has approved the withdrawal'.
The sovereign bond was seen as an opportunity for the Government to borrow cheaply and further cut down on domestic borrowing, which would in turn help reduce the interest rates.
The Government intended to use the borrowed money to retire a Sh53.2 billion two-year syndicated loan that had been procured in June 2012 and was due in May 2014, and to fund infrastructure projects.
The Auditor General's 2013-2014 report indicated that the net proceeds received from sovereign bonds amounted to Sh176 billion and were deposited in an offshore account in contradiction of Article 206 of the Constitution.
Of the Sh176 billion, Sh34.8 billion was transferred to the Exchequer to fund pending bills for infrastructure projects in the said financial year.
Another Sh53.2 billion was used to fund the repayment of the syndicated loan and the remaining Sh87.9 billion was used to finance the 2014-2015 budget.
National Treasury Cabinet Secretary Henry Rotich was scheduled to appear before the committee to shed light on the Sovereign Bond but failed to turn up. His office said he was engaged in another committee meeting.
He will appear on November 2.
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