How youth fund bosses ignored Treasury rules

Public Service, Youth and Gender CS Sicily Kariuki (left) hands over a dummy cheque of Sh18 million from Uwezo Fund to women at Nakuru's Nyayo Garden yesterday. [PHOTO: BONIFACE THUKU/STANDARD]

The board and management of the Youth Enterprise Development Fund violated various laws by investing Sh400 million in a bank, a parliamentary watchdog committee has said.

Members of the Public Investment Committee (PIC) hit out at the board chairman Bruce Odhiambo and suspended Chief Executive Officer Catherine Namuye for investing the fund's money in a private bank instead of Treasury bills or bonds.

In contention is the decision by the fund's secretariat and board to invest the money at Chase Bank, against Treasury guidelines. Regulations of the Public Finance Management Act bar parastatals from investing in term deposits with commercial banks, after the collapse of several lenders in the past led to massive losses of Government money.

The law that established the YEDF, however, gives express authority to the board to invest any of the funds which are not immediately required for use in 'such securities as the Treasury may, from time to time, approve'.

Idle cash could only be kept in bank accounts belonging to the fund, and not in fixed deposits accounts, as was the case with Odhiambo and Namuye.

"The Board may place on deposit with such bank or banks as it may determine any money not immediately required for the purposes of the Board," the regulations read in part.

Term deposits, unlike ordinary customer deposits, are not available for withdrawal on demand. Customers who place term deposits with banks, however, earn a bigger interest return, but can only access their money after the expiry of a specified period.

An official at the National Treasury said investment guidelines are regularly issued to parastatals through circulars - which have now been flouted.

This comes at a time the acting Inspector-General (Corporations) Titus Muriithi wants the chairman and the board to step aside and allow for investigations. This was contained in a letter to Public Service, Youth and Gender Cabinet Secretary Sicily Kariuki.

Now, the legislators are demanding to know why Chase Bank allowed the change of signatories, making Namuye the sole signatory based on Odhiambo's letter, without being accompanied with the board's minutes and resolution.

"Treasury sent a circular to public institutions last year, instructing them to invest their funds in Treasury bills and bonds. When it comes to investing in private banks, they will need special permission from Treasury, "Oburu Oginga (Nominated), who is the former finance assistant minister, sought clarification from the board chairman.

"We need to be furnished with an official letter from Treasury confirming approvals for private banks investments, especially Chase Bank." said Tharaka/Nithi County MP Beatrice Nkatha.