Bosses splurge millions as State agencies sink in debt
Participants during a three-day induction conference for board members of State corporations at Lake Naivasha Resort in Nakuru County on July 13, 2023.
It was a show of opulence as more than 600 board members of State corporations flocked Naivasha on Wednesday evening for a three-day induction workshop.
The parking lot resembled a mini car bazaar, with luxury vehicles, including fuel guzzlers, screaming for attention.
Some, having been appointed to the revered positions, were literally making the most of the trappings of power as they arrived for their maiden induction course at a Naivasha hotel.
The blue-plate vehicles were conspicuous, with their drivers beside them.
This was the fifth cohort of an induction programme that focuses on various issues, including the functioning of the national government.
Although it was not immediately clear how the luxurious vehicles are fuelled, the Nation established that by the end of the three-day workshop, the government will have spent an estimated Sh100 million to train the new board members.
This was the second part of the training, with the first having been done in April that involved three cohorts.
The Nation also learnt that those who attended the training were charged Sh60,000 each for tuition, according to an official circular. There were at least 600 board members in the cohort.
At the end of the three-day programme, the board members will part with at least Sh36 million in tuition fees.
Sh5,000 for conference facilities
With an average of Sh12,000 for accommodation and Sh5,000 for conference facilities, the participants would have parted with a further Sh17,000 each, totalling more than Sh46 million.
This includes training, lunches, refreshments and training materials.
This comes at a time when some of the government entities are said to be struggling and heavily indebted.
For instance, State corporations have failed to remit about Sh35 billion in statutory payments.
The 150 government agencies are holding Sh35,189,136,021 in unremitted statutory deductions.
Some of the deductions that have not been remitted by the institutions include Pay as You Earn (Paye), National Social Security Fund (NSSF), National Health Insurance Fund (NHIF) as well as loan deductions from Saccos and pension contributions.
Failure to remit critical statutory deductions means that many may have little to live on in their sunset years, leaving them to suffer.
According to a document tabled in Parliament by the National Treasury in March 2023, State-owned enterprises are struggling to meet their financial obligations.
In total, the parastatals have accumulated outstanding bills of Sh400.68 billion, which includes payments owed to contractors and suppliers in addition to staff deductions.
The document was sent to Parliament because most parastatals appearing before various committees usually complain that they do not have money to settle outstanding bills and remit statutory deductions.
In fact, Prime Cabinet Secretary Musalia Mudavadi, speaking during the first induction workshop in April, described the failure by some State enterprises to remit statutory deductions to employees as ‘illegal and unlawful’.
“The Auditor-General’s audit reports continue to show that many State-owned enterprises are failing to make statutory remittances and even dues to parties such as banks and cooperatives. This is not only illegal but also unethical,” said Mr Mudavadi.
“It is unconscionable for a public entity to deduct third party payments from an employee's salary and not remit them. Public ethics demand that if there is not enough money to pay the entire salary, it is prudent to delay the entire payment rather than play mischief by paying only the net salary,” Mr Mudavadi added.
The State Corporation Advisory Committee (SCAC), in association with the Institute of Certified Public Secretaries (ICPS), conducted the programme, which involves five cohorts. The first, second, third and fourth cohorts were trained from April 12 to 26, with each training lasting three days.
One participant described the training as ‘intensive’, with participants required to attend the training.
The participant said depending on the State corporation, participants have different travel arrangements, with some driving to the venue in their private cars.
He laughed off claims that board members drove to the venue in fuel guzzlers and luxury cars, saying it was a ‘personal arrangement’.
“Personally, I drove to the meeting place with private means... I don’t know about those who used fuel guzzlers,” the board member said.
According to the organisers, the workshop is aimed at promoting good governance and best practices in State corporations.
At the April meeting, Mr Mudavadi urged board members of State enterprises to ensure that they make a profit or face privatisation.
His remarks came amid a Treasury report that some State enterprises were making huge losses despite increased government funding.
“This situation is unacceptable. You have an urgent duty to make things profitable, otherwise the hammer of privatisation is knocking on the door,” Mr Mudavadi told participants.
