A Senate watchdog committee has directed the anti-graft agency to investigate financial malpractices at Tavevo Water and Sewerage Company that could have led to the loss of about Sh100 million.
The senators also called on the Ethics and Anti-Corruption Commission (EACC) to recover irregular payments made to the firm’s board of directors.
The Senate County Public Investments and Special Funds committee raised concerns over several audit queries on the Taita-Taveta County’s water utility during the tenure of former Governor Granton Samboja.
The committee said the company is basically insolvent as it is operating with a negative working capital of Sh75.5 million and is struggling with debts to the tune of Sh545 million. Further, the utility could only collect Sh262 million in revenue against a target of Sh937.6 million.
“We want the governor to collaborate with the EACC in investigating areas of breach of the law. We also recommend recovery of irregular payments made to the board members within 60 days,” said the committee’s chairperson, Vihiga Senator Godfrey Osotsi.
The lawmakers also called for a complete overhaul of the board of directors within two months as well as confirmation or recruitment of a substantive managing director.
According to Auditor-General Nancy Gathungu’s report for the financial year ended June 2021, the water firm had bloated administration costs amounting to Sh390.9 million against revenues of Sh262 million.
The expenditure includes Sh102.3 million in staff cost and another Sh1.5 million in training expenses, which could not be supported with a training plan and training needs report, contrary to the law.
The auditor also queried the firm over Sh6.8 million spent on emoluments for the board, with irregular allowances of Sh790,000 flagged. There were also unsupported night-out claims of Sh450,000. Further, the board held 55 sittings out of which 12 were full board meetings, contrary to the law which sets the maximum at six.
Irregular composition of committees of the board, where each had five members against the requirement of three, was also flagged. The firm is also struggling with stalled projects worth Sh254.2 million.
Further, the audit report raised alarm over unsupported legal fees amounting to Sh750,000, with the company not being able to disclose the nature of legal services offered.
“The audit queries reveal a going concern, which basically means this company is dead. The patient is in ICU, and it is only funding from donors that are still keeping it alive, but the patient will eventually die,” said Mr Osotsi.
In the financial year ended June 2019, the company had a negative working capital of Sh208.1 million with liabilities of Sh489.1 million against assets of Sh280.5 million. The following fiscal year, the liabilities were Sh441.6 million against assets of Sh366.1 million resulting in a negative working capital of Sh75.5 million.
“From the statements, it means this company is insolvent and depends on continuous support from the county government and grants from donors,” said nominated Senator Tabitha Mutinda.
Appearing before the committee yesterday, Governor Andrew Mwadime admitted to the breaches and said they are working to pump life into the company.
He said he sent the substantive managing director on compulsory leave to allow for investigations. However, the MD went to court and obtained a stay order.
“We also realised the board was not constituted as per the law as some members were not even qualified to be in it. We have advertised for three positions,” said Mr Mwadime.
Acting MD Richard Kibeng’o said the firm is paying high bills including Sh8 million monthly to Coast Water Works Development Agency for bulk water, with the outstanding bill now at Sh415.6 billion and another Sh129.3 million in lease fees.
