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City Hall can’t account for billions, says Ouko

Dinah Ondari @dinahondari

After every five years, a fresh flock of ravenous vultures descend on Nairobi, the once proud Green City in the Sun, that tragically has over the decades been decaying.   

They often come swirling over the city adorned in deceptively brilliant plumes, and with sweet tongues woo voters.

It is this ritual of plunder by the leaders that feeds on impunity— and gullibility of voters— that Auditor General Edward Ouko lays bare in his report on expenditure by the Executive in the counties.

In the report, which was released yesterday, Ouko exposes the massive plunder of taxpayers money in Nairobi county where billions of shillings were lost in questionable transactions in the year ending June 2017.

The report paints a picture of blatant looting by the then governor Evans Kidero’s administration days to the general election in which he lost to Mike Sonko.

It validates another one that was released in July in which a State agency launched investigations against the former governor and nine officials in his administration over suspected embezzlement of Sh7.8 billion.

Financial Reporting Centre (FRC) raised the red flag over huge withdrawals from several county collection accounts operated in one bank between April 2014 and August 2017.

Suspicious withdrawals

FRC  wrote to the Directorate of Criminal Investigations and copied the Ethics and Anti-Corruption Commission to investigate Kidero, nine county officials, directors of four pharmaceutical companies and bank officials.

The officials are suspected to have moved a total of Sh7,761,474,162 in large withdrawals. Money was debited from the accounts mainly through structured cash withdrawals. This mode of withdrawals raised suspicions of an attempt to break up financial transactions to get around the banking reporting requirements for transactions over a certain amount.

Manual ticketing

The Auditor General now says that out of more than Sh10 billion collected during the year under review, only Sh2.4 billion was banked with the balance of Sh8, 512, 360,746 being spent at the source, contrary to Section 105 of the Public Finance Management Act 2012.

Ouko’s report indicates, for instance, that there was a loss of Sh3 million as a result of manual ticketing as opposed to automated ticketing which the county is supposed to use.

“Site visits to the parking areas on diverse dates revealed that the vehicles were normally double parked which is an indication of revenue collection in excess of a parking area’s potential,” the report notes.

Hospitals affected

The plunder goes to the hospital such as Pumwani Maternity, Mama Lucy Kibaki, Mbagathi and Dagoretti sub-county— where it hounds the sick and expectant mothers giving birth. The Sh290 million channelled to the county for free maternity just vanished without a trace.

The report says that the National government released Sh342 million as maternity reimbursement for Pumwani hospital, but only Sh173 million ended up at the health facility— this means Sh158 million cannot be accounted for.

“Despite the county government receiving the free maternity funding, reimbursement was not made to the hospital thus affecting its daily operations,” says Ouko.

Mama Lucy Hospital never received Sh17m for maternity care reimbursement despite having handled 3,468 deliveries during the year.

In the year under review, Mbagathi Hospital handled 4,281 deliveries but it never received its due reimbursement of Sh21 million just as Dagoretti sub-district hospital was denied Sh3 million for  nearly 5,000 births it handled.

The reports show the county spent Sh1.3 billion in unbudgeted-for  expenditure — debt repayment, Sh2 billion, bank charges, Sh147 million and loan repayments of Sh30 million.

The Nairobi county also took Sh1 billion overdraft through four accounts. No reasons were given for the overdrafts.

Security

Ouko also indicts Nairobi county administration for failing to declare a possible loss of Sh4 million that may have sunk in the collapsed Chase Bank. He says Sh3.9 was being held under moratorium due to the receivership status of the bank.

“This information was not disclosed in the financial statements of the county executive as at 30 June 2017. Consequently, the cash and cash equivalents position of the county executive as reported in the financial statement is misleading and not fairly stated,” he adds.

The report also indicates that during the year under review, the county operated 23 bank accounts with a  Sh500 million negative balance. There is no explanation on how the money was spent.

On security, Nairobi residents appear to be on their own. The Auditor General could not establish the viability of Integrated Urban Surveillance System for Nairobi Metropolitan area on which the government spent Sh500 million in 2012.

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