Waiguru put on the spot over loss of Sh180 million at the Youth Fund

Waiguru’s instructions were issued on October 28 last year; two days after Mangiti wrote a letter to controversial Youth Fund board chairman Bruce Odhiambo – copied to Waiguru – advising him to invite the EACC to investigate the Sh180 million loss, a suggestion he ignored.

It had begun on October 23, when Odhiambo wrote three letters, suspending Namuye and Finance Manager Benedict Atavachi and inviting the Banking Fraud Investigations Unit to probe the multi-million loss.

Mangiti then wrote back advising that the investigations should include the anti-corruption commission as the matter was bigger than a fraud. It was against a copy of the Mangiti letter that Waiguru scribbled “Pls get admin report also from the CEO”.

At the time and despite the suspension, Namuye was reportedly hovering around the Youth Fund, leaving staff puzzled as her removal had been publicly announced.

Asked to comment on the fresh details, Ms Waiguru, who stepped down as minister in November last year, declined to be drawn into any discussion.

PIC probe

“I can’t stop people from making claims, however ridiculous or frivolous,” she told The Standard on Sunday. “If your newspaper prints any untruths I will have no option but to sue. I think we should start focusing on truths.”

On his part, Mr Mangiti, who has been charged in relation to the Sh791 million loss at NYS, said the truth would come out at the ongoing National Assembly Public Investment Committee (PIC) hearings.

He said: “Do me a favour and keep me off this matter for now. The truth is slowly coming out through the PIC process. I think it will be prudent for us to wait and see.”

The Standard on Sunday has established that Mangiti and Waiguru have been invited to appear before PIC in the next two weeks.

Sources say when Waiguru proposed that a report be obtained from the suspended Namuye, Mangiti, who was the minsitry’s accounting officer, refused to engage her, citing the suspension letter which said that the CEO “shall not carry out any business on behalf of the Youth Enterprise Development Fund Board”.

The relationship between Mr Mangiti and Ms Waiguru was also not at its best at the time owing to the National Youth Service (NYS) scandal investigations.

The intrigues surrounding Mangiti’s letter of October 26 have since emerged. Apparently, the PS was not satisfied that a probe by the Banking Fraud Investigations Unit would unearth the full scope of the rip-off and had wanted Anti-Corruption Commission involved right from the onset.

When Odhiambo refused to invite the Commission, Mangiti officially put his advice on record in the October 26 letter.

“Given that the nature of potential crimes may go beyond fraud, I strongly advise that the board immediately requests the Ethics and Anti-Corruption Commission to also launch investigations into the matter,” he wrote.

Odhiambo did not respond to the letter or invite the Anti-Corruption Commission as advised. Nine days later, on November 4, it fell on Mangiti to write directly to the anti-corruption CEO Halakhe Waqo, requesting him to “move in and investigate” the malpractices at the fund.

The letter was copied to Chief of Staff and Head of Public Service Joseph Kinyua, Waiguru and Odhiambo, with instructions to the board to “fully cooperate” with the probe team.

Both the Banking Fraud Investigations Unit and the anti-corruption commission took more than a month to officially start their parallel investigations.

According to documents presented to the National Assembly’s Public Investments Committee by the new Cabinet Secretary for Public Service, Youth and Gender Affairs, Ms Cecily Kariuki, both institutions started investigations on the same day, December 11, three weeks after Waiguru had resigned from the Cabinet.

These revelations came as fresh details continued to filter in regarding the grave malpractices at the Youth Enterprise Development Fund. It is now emerging that Namuye had long started exercising single-signatory powers of the fund’s fixed deposit account – from where the Sh180 million was irregularly withdrawn – long before they were granted, which decision has now come under question.

Joint letter

On February 17, 2015, Odhiambo and Namuye had written a joint letter to the bank manager conveying fresh instructions of the board about “authorised signatories” to the fund’s call deposit account held with the bank.

“The signing instructions are; the CEO can sign off any instructions. In absence of the CEO, two signatories must sign, with one being a mandatory signatory,” reads the letter which has led to accusations from MPs that he was party to the fraud.

The letter appears to have been a mere formality. Six days earlier, on February 11, Namuye had already singly signed off Sh115 million to be paid to Quorandum Limited for “consultancy services rendered”. The bank obeyed the instruction and paid out the amount.

In the letter which she later disowned at a board meeting held on October 21, Namuye also instructed the bank that the remaining funds be rolled over for a further period of three months.

However on April 27 before the three months were over, Namuye wrote back to the bank’s General Manager with instructions to pay Quorandum Limited an additional Sh65 million for “consultancy services rendered”.

“Following the maturity of fixed deposit held with your bank, please take this as instruction to debit our account with Sh65,184,946 and make payment to our supplier Quorandum Limited,” she said in the letter which she also reportedly disowned.

Ms Kariuki has since told the PIC that the payments to Quorandum Limited for development of the “ICT strategy” did not comply with Public Procurement Act 2006 and Regulations 2007, was not planned for nor authorised and that the procurement was not advertised.

There were no tenders received at the secretariat in relation to the said consultancy services, no evaluation process undertaken by the secretariat for the provision of the said services, no tender committee held to approve the service and no discussions of the same at board level.