More rot at the troubled Youth Fund revealed

The rot at the Youth Fund runs deeper than the Sh180 million payout to Quarundum, an IT company, over a fictitious job, The Standard on Sunday can reveal.

A report presented to the board at the end of 2014 points to a possible loss of an additional Sh150 million in unclear circumstances.

The report also questions the purchase of 1,000 hatcheries, which the beneficiaries could not afford.

In 2013, Youth Fund executives entered a financial agreement with Indo Africa Finance Ltd for disbursement of loans to their members.

One riders in this deal was that money for disbursement be wired through Indo Africa’s ABC bank account. It was agreed that ABC would provide the bank guarantee.

However, after the paper work was done, the money was deposited into a Cooperative Bank account still associated with Indo Africa. In this new twist, there was no bank guarantee from Cooperative Bank and no disbursements by Indo Africa to the Funds’ members.

“To date, Youth Fund continues to incur legal costs as it tries to compel Indo Africa Ltd to pay back the Sh150 million.”

Contacted, an officer at Indo Africa told The Standard on Sunday he was not working for the company in 2013. He promised that the company chief executive officer or managing director would get back with details on the deals.

By the time we went to press, no information had been provided by the financial institution.

Also in the internal report is the procurement of hatcheries by the fund in the same year. “This was done without a proper feasibility study,” the report reads.

The fund procured 1,000 hatcheries at a cost of Sh270 million.

“The machines were procured in large quantities and at exorbitant prices instead of buying them on a needs basis,” reads the report.

Currently, 800 or the original 1,000 hatcheries are still in the possession of the board, incurring storage charges of Sh200,000 every month.

“At the time of purchase, it was thought that the hatcheries would be sold to youth groups for Sh270,000,” the report says.

It also queries a Sh600 million budgetary allocation to benefit film makers and artists.

“There is no evidence that the money was used towards this end and was in fact diverted to other accounts without the board’s approval,” the report says.

When contacted, embattled former Youth Fund Chair Bruce Odhiambo said the money had already disappeared when he got into office.

“The money just disappeared. All former executive office holders should be investigated for this loss,” he said.

Mr Odhiambo and the rest of the board were fired from their positions by the Executive. His appointment as chair to the Youth Fund board was revoked by the President.

Other issues raised in the report had to do with a poor and amorphous human resource structure.

“The fund has not been able to attract and retain qualified personnel in IT and communication to directly speak to their target audience,” it says.

Over the years, the Youth Fund has morphed from a noble initiative to a cash cow for political appointees. In 2009, Umuro Wario, the first Youth Fund CEO, was suspended over irregularities in financial, recruitment and procurement procedures in the institution.

It later emerged Wario fell out with the board on issues related to the directors’ interference in the day-to-day management of the fund.

Defending himself, Wario said he did his best to safeguard the money but paid a heavy price when the board edged him out. He survived the suspension, but his term was not renewed.

He was succeeded by Juma Mwangala who barely two years into the job was suspended by the board over financial and procurement irregularities, an accusation he denied and accused the board of undue interference.

At that time, multiple audit reports on the Fund done by different government agencies – including one by the Efficiency Monitoring Unit and another by the then Youth Ministry – blamed both the board and the management for massive mismanagement of resources.

It was under Mr Mwangala’s watch that the hatchery project was conceived.

Currently, the Youth Fund is in no better shape. With a dismissed board and a former CEO, Catherine Namuye, under investigation over the loss of Sh180 million, Kenya’s youth still wait for the promise of better lives.