TO END CORRUPTION IN KENYA IT IS TIME TO AUDIT KENYA’S MINISTRY OF FINANCE AS DIRECTED BY PARLIAMENT: NO AUDIT, NO MORE MONEY FROM KENYAN TAXPAYERS
Corruption and impunity are king in government of Kenya circles. Maize, Oil, Guns, Grand Regency Hotel, Goldenberg, the phantom Ken Ren Fertiliser Factory, Anglo Leasing, Free Primary Education, the list goes on and the institutional rot is obvious.
Independent audits have recently exposed crooked transactions in key Kenyan government ministries including Education, Agriculture, Special Programmes and the Office of the Prime Minister. But there is one important independent forensic audit that although ordered by Parliament, eight months ago appears stalled. It is the biggest forensic audit in Kenya’s history and it is meant to investigate a three year period of the National Budget because following exposes by Mars Group in April 2009 Parliament discovered that there was 10.7 billion shillings missing in the Supplementary Budget submitted to it by the Office of the Deputy Prime Minister and Ministry of Finance. We believe that this forensic audit would have discovered and stopped even larger scandals than those titillating the Kenyan press. Despite the obvious connection to today’s corruption scandals, and for unknown reasons, few are demanding that this audit finally kicks off. Here’s the story of Kenya’s forgotten ten billion shilling scandal.
AUDIT THE TREASURY
On 13th May 2009 the Report of the Joint Committees on Finance Planning and Trade and the Budget Committee on the inconsistencies contained in the supplementary estimates of the Financial Year 2008/2009 was tabled in Parliament and was unanimously adopted by a Motion of the whole house.
Moving the Motion Hon Chris Okemo on behalf of the Joint Committees told the National Assembly that their investigation into the Supplementary Budget had identified a total discrepancy of Kshs10,763,446,275 arising from 200 Items affecting the recurrent expenditure of 36 Ministries and departments. Clearly the problem was huge.
Hon Okemo told the National Assembly that the information was derived directly from the supplementary budget. We quote verbatim:
“…I would now like to go to the issue of discrepancies, which has been the subject of the Committee’s proceedings. The following people appeared before the Joint Committee and gave valuable evidence: The hon. Gitobu Imanyara, MP; the Deputy Prime Minister and Minister for Finance, MP; the Permanent Secretary, Treasury, and his Budget Officers; Mwalimu Mati of Partnership for Change; Jayne Mati, Partnership for Change; Cyprian Nyamwamu, Partnership for Change, and the Controller and Auditor-General.
Madam Temporary Deputy Speaker, we examined the evidence from hon.Imanyara in great detail, and found the data acceptable and very helpful to the proceedings of the Committee. That information, irrespective of its source, came directly from the Printed Supplementary Estimates.”
The Joint Committee Report contained several important recommendations which were unanimously adopted by the National Assembly. Hon Okemo told Parliament that the Joint Committee had made recommendations and again we quote verbatim
“Madam Temporary Deputy Speaker, having looked at all this evidence and having laid the background on how budget-making is done under the provisions of the Constitution, and having found out that there were discrepancies at some point, I would now like to read out the recommendations of the Joint Committee.>
The first recommendation is that since there are inconsistencies in the Supplementary Estimates, they should be withdrawn and the correct Estimates resubmitted to form the basis for the Appropriation Bill which will be brought before this House.
Secondly, an independent forensic audit should be done by an independent body to look into the three years that have been under the GFS system to determine whether there might have been other inaccuracies or inconsistencies in the last two years in addition to the current year.
The third recommendation is that the Fiscal Management Bill is long overdue and I am glad to see that we have on the Order Paper, the Motion to discuss the Memorandum of His Excellency the President on objections to the Fiscal Management Bill. I believe that we shall carry out that exercise with speed and that it will receive the support of everybody, including the Government side. This is because more transparency, interrogation and participation in the budget-making process will lead to a Budget that all can be happy and comfortable with. That Budget will reflect the real priorities as spelt out by the Government.”
The first recommendation was addressed and the Minister for Finance withdrew the Supplementary Estimates first laid on the Table of the House on 22nd April, 2009, and re-submitted new Supplementary Estimates.
The third recommendation was addressed when the Fiscal Management Act came into effect on 19th June 2009.
The second recommendation (that there should be an independent forensic audit) has not been acted on at all. And yet since May 13th 2009, several ministries have been implicated in financial scandals and acts of corruption and financial mismanagement have been reported and investigated by independent forensic audits.
In moving the motion to adopt the report on behalf of hon. Members of the Joint Committee on Finance, Planning and Trade and the Budget Committee, Hon Chris Okemo also told the National Assembly why an independent forensic audit was necessary:
“… Madam Temporary Deputy Speaker, it is not, therefore, very easy to be able to conclusively say here that the discrepancies do not show whether money was misapplied or not. That is why, as one of our fundamental recommendations, we have said that there has to be a serious, in-depth forensic audit into all the data that appears in the current financial year as well as in the last two previous years. However, the letter we have received from the Controller and Auditor-General is very specific. In part, it says as follows:-
“As may be observed above and in the Appendix, the difference of Kshs 10,763,446,275 was caused by unreconciled discrepancies between the provisions shown in the Printed Estimates for 2008/2009 against various Votes and those appearing in the Supplementary Estimates for the period against the same Votes.”
The third comment in the letter I have referred to is as follows:-
“The difference of Kshs 10,763,446,275 does not, however, constitute any loss or misappropriation of public funds.”
I am merely quoting a letter from the Controller and Auditor-General, addressed to the Clerk of the National Assembly.
Madam Temporary Deputy Speaker, the evidence, therefore, on the basis of the data that was available to us, that was talking about discrepancies, seems to suggest that the differences that arise as a result of non-reconciliation of Items does not lead to loss of funds or misappropriation of funds.
However, because of the time constraint, and because of the volume of the data that was involved, it must be appreciated by this House that those numbers have far reaching implications as far as the economic development of this country is concerned, and as far as the allocation of funds in this country is concerned. We want to satisfy ourselves that since the introduction of the Government Financial Statistics (GFS), that is an international standard for coding, which was introduced three years ago, all the figures contained in the Printed Estimates and Supplementary Estimates for the three years in question are correct. We want to satisfy ourselves that no such errors may have been caused, or that no misappropriation or misapplication of funds may have taken place. ….“
The Chairman of the Budget Committee, Hon Martin Ogindo in his submissions to the National Assembly re emphasized the necessity of an independent forensic audit in these terms:
“ The second issue that the Committee was to inquire into was as to whether funds could have been misapplied. To this end, as has been indicated by the Chairman, the volume of data involved and the time span that the Committee had, it would not have been possible to determine that. In this context, as has been articulated by the Chairman, the Joint Committee has recommended a forensic audit to be done.
Maybe, for all to know what we are talking about, a “forensic audit” is an investigation of a fraud, a presumptive fraud or a suspected fraud with a view of gathering evidence that can support the figures. We would like to have a forensic audit in the budget-making process in this country to determine whether, indeed, there is compliance with the regulatory requirements. As was submitted to the Joint Committee by the Deputy Prime Minister and Minister for Finance, this error could have been caused by a computer bug or a deliberate act of computer operators. What we noted is that, indeed, there was a deliberate commission of an act of error. To this end, it will be important that a system audit also be carried out to determine or evaluate the objectivity, inadequacies, competence and due diligence of the institutions and persons engaged in the budget-making process.
Madam Temporary Deputy Speaker, over and above that, we would expect a forensic audit to reconcile the budget provisions in the Printed Estimates, the Vote Book balances and entries, the Supplementary Estimates, the Consolidated Fund Services (CFS) items and Exchequer issues for the 2008/2009 Financial Year. It is a point that we will be sure that no funds have been misapplied. Towards that end, the Committee strongly recommends for a forensic audit.”
Hon Ogindo went on to describe the essence of the independent forensic audit thus:
“Madam Temporary Deputy Speaker, the whole essence of a forensic audit is to determine whether what we are using as a Budget programme is, indeed, reliable. Secondly, it is to determine through reconciliation, which we could not do because of shortage of time and lack of expertise, whether funds could have been misapplied.”
In view of the current corruption revelations, the Partnership for Change is of the view that the independent forensic audit of the National Budget as resolved by the National on May 13th 2009 is urgent and particularly so because the Government is preparing to bring a supplementary budget before the house soon.
The resolution by Parliament calling for an independent forensic audit into the National Budget for the last three years was arrived at after the National Assembly satisfied itself that an independent forensic audit was necessary to be sure that no public funds had been misapplied pursuant to what Treasury called a Kenya Shillings 10.7 billion computer error.
An independent forensic audit as directed by the National Assembly would determine or evaluate the objectivity, inadequacies, competence and due diligence of the institutions and persons engaged in the budget-making process. Further such an independent forensic audit would have discovered any systemic or deliberate errors, theft, or mismanagement of the taxpayers’ resources and would have identified those responsible for such errors, theft or loss of public funds. The independent forensic audit would have certainly captured the misconduct of the Agriculture and Education Ministries. It should be noted that over 8 billion shillings of the 10.7 billion shillings identified in the supplementary budget ‘computer error’ inquiry was actually in the budget of the Ministry of Education which has recently been embroiled in scandal over the Free Primary Education subsidy.
The independent forensic audit is the only way in which to ascertain that Kenyan taxpayers’ funds are being used for the purposes approved by our representatives according to the votes in the National Budget. We trust that the National Assembly will reaffirm that the Government does not have its own money and that all its funds save for those borrowed belong and are given to the Government by Kenyan tax payers. As such the government must be accountable to the Kenyan citizens through the National Assembly and the independent forensic audit is a means to secure such accountability.
Members of Parliament are paid to secure the peoples interests. We cannot continue to pay taxes to a Government that steals our sweat while our children continue to suffer. If the Independent Forensic Audit does not commence immediately, then the Kenyan public will have the moral authority to stop remitting taxes to the Government.
We have therefore commenced a 100 days campaign for fiscal accountability. We will therefore remind Parliament of its obligation and duty to Kenyans that they represent.
The Partnership for Change is petitioning parliament pursuant to section 205 (2) of the new standing orders. We are asking that Parliament
1. Resolves that the Implementation, Budget and Finance Committees of Parliament urgently work to ensure that an independent forensic audit into the National Budget for the financial years 2006/2007, 2007/2008 and 2008/2009 is commenced in terms of implementing the resolution of the National Assembly of May 13th 2009
2. Hears our Petition and acts on it as one of the means of ending fiscal mismanagement in the Government of Kenya
3. Takes any other authorised action to ensure that the resources for such an independent forensic audit are availed and that the forensic audit is completed in good time to ensure that the next National Budget is clean and economical.
4. Resolves that an independent forensic audit be commissioned immediately and be completed before the next supplementary budget is brought to the National Assembly for approval by our elected representatives.
Kenyans can download a copy of the petition here.
Collect 20 signatures and drop off the completed petition forms to:
The Kenya National Commission on Human Rights (KNCHR)
Kasuku road, off Lenana road,