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Governors' nightmare as inherited debtors go to court

By Standard Team | June 25th 2018
Busia Governor Sospeter Ojaamong. Development projects in Western will be compromised as counties move to offset liabilities. [File, Standard]

County governments in Western Kenya are grappling with huge debts inherited from defunct local authorities. Last year the national Government left all liabilities inherited from the local authorities to the devolved units.

This means that some county governments will have to compromise development projects to settle debts the former county council owed.

Accumulated debts

Busia Governor Sospeter Ojaamong told The Standard that Sh400 million would have to be trimmed from the 2018/2019 budget to settle the inherited debts.

“I believe some people worked for the county councils or tendered their legal services but were yet to be paid, which led to accumulation of the debts,” said Mr Ojaamong.

The governor said the county government could not pay the debts unless it was captured in the budget.

“If we pay out the money, the Ethics and Anti-Corruption Commission will be on my neck, and again, the IFMIS will only pay something that is in the budget,” he said.

The county boss said if the inherited debts were paid out in one financial year, no substantive development would be realised.

Thorough scrutiny

Ojaamong said his administration was keen on offsetting the debts and disclosed that thorough scrutiny of the bills would be conducted before payments are made.

“Previously, there was a policy that a government vehicle could not be attached, but some people have attached county government vehicles because they are yet to be paid," he said.

Joe Abetter is one of those the county owes money. He has since moved to court to seek orders to demolish maternity wards and a drug store erected on his land by the county government.

Reneging on a promise

Mr Abetter is accusing the county government of reneging on a promise to compensate him for the land used for the project.

The land section occupied by Matayos Health Centre was acquired by the defunct Busia local authority in 2012. According to him, the civic body was supposed to pay him Sh3.5 million for the plot.

In the case filed in 2016, Abetter wanted the Land and Environment Court in Busia to allow him to demolish the structures, and provide police security during the demolition.

On April 19, the Land and Environment Judge Antony Kaniaru delivered a ruling that marked the end of more than five years of a legal battle between the two parties.

Justice Kaniaru, in his judgment, noted that the county failed to convince the court that it was the rightful owner of the land since it had no title deed.

Sh15 million debt

Julius Manwari is also demanding more than Sh15 million for legal services he tendered the defunct local authorities in 2011.

“I have been promised over and over that I will be paid my money, but nothing has been forthcoming,” he said.

It is against this backdrop that Ojaamong is warning that if the trend continues, the county government is going to suffer and most essential services will not be rendered.

The new governors in the Western region -Wycliffe Wangamati (Bungoma) and Wilber Otichillo of Vihiga - are also grappling with huge debts inherited from their predecessors.

In Bungoma, the county owes contractors Sh1.2 billion. The money accumulated during the reign of Ken Lusaka, who is now Senate Speaker.

The Bungoma boss blamed the National Treasury of allegedly failing to release money to pay contractors in time.

“We are likely to use a chunk of our allocation to pay the outstanding debts to enable the county to move,” said Mr Wangamati.

The governor said he had to balance between debts and development.

The chairman of the Bungoma County Contractors Association Wafula Maelo said they had not been paid for work done, some of them since 2014.

Sh1.2 billion debt

“The county has taken us round in circles for long. What we want is the county to pay us the debt amounting to Sh1.2 billion for the work we did,” said Mr Maelo.

In Vihiga, on assumption of office, Mr Ottichilo ordered for an audit to establish the status of pending bills as at June 30, last year.

The 2017 Auditor General report showed that as at June 30, last year, Vihiga County’s pending bills stood at Sh2.4 billion.

The audit revealed that bills were inflated by some officials while contractors were involved in the grave anomalies between 2014 and 2016.

After a comprehensive analysis of the initial Sh2.4 billion, the bills reduced to Sh826,259,130, the report indicates.

The report came as a shocker to contractors who worked under former Governor Moses Akaranga.

The audit report revealed that contractors exaggerated valuations, followed non-procedural procurement processes and never submitted relevant certificates to show completion of their works.

The Transport and Infrastructure department is the worst hit with many audit queries for awarding 296 projects with a cumulative contract value of Sh1,679,121,395 for 2015/2016 audit, which were later revised to Sh739,500,213.

Out of these projects, only 49 with a cumulative contract sum of Sh236,530,819 of the contracted works were classified at 100 per cent level of completion.

“Review of 14 per cent of completed projects showed no evidence of completion certificate issued by Inspection and Acceptance Committee, and no handover reports were availed,” the report notes.

The inspected and accepted works were valued at Sh602,139,077 and payments amounting to Sh287,102,408 had been made to the contractors, leaving a balance of Sh370,424,080.

County liabilities

In Kakamega, Deputy Governor Philip Kutima said liabilities the county inherited were insurmountable.

“The liabilities are huge when translated to monetary form, and this has a negative impact on our development agenda,” he said.

However, Prof Kutima could not divulge more information in connection with the said debts. He promised to give details once the report was available to be made public.

The county has since raised its budget estimates for the 2018/2019 financial year from Sh13.2 billion to Sh14.5 billion, a 10.16 per cent increase.

Recurrent expenditure will receive 52 per cent of the allocation, while 48 per cent has been earmarked for development.

Health, infrastructure, Agriculture and ECDE programmes have been given priority in the budget estimates in line with the national government’s Big Four agenda.

Kakamega is the second largest rural county in terms of population, with at least two million people.

The county's budget estimates is the highest compared to what Bungoma, Vihiga and Busia are expected to spent this financial year.

[Ignatius Odanga, Raphael Wanjala, John Shilitsa and Erick Lungai]

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