MPs after Equity bank, others over Sh6.3bn diverted from eCitizen
MPs have summoned the management of Equity Bank Kenya Limited over unauthorised diversion of Sh6.3 billion in revenue collected through the eCitizen platform, according to a special audit by Auditor-General Nancy Gathungu.
The members of the National Assembly Committee on Public Accounts (PAC) made the demand after the special audit revealed that an account in the name of Pesaflow was opened at Equity Bank, into which proceeds from eCitizen, a government digital revenue collection platform, were “irregularly deposited.”
Other than the Equity bank management, PAC, chaired by Butere MP Tindi Mwale, also wants Attorney-General Dorcas Oduor and owners of Pesa Flow Limited, Goldrock Ltd, Olive Media Limited, Webmasters Kenya and Electronic Citizen Solutions- the agencies involved in the collection of revenue through eCitizen to appear before it.
“The committee invites the above people so that they can come and give their side of the story, especially on licensing agreements, approvals of payment, withholding of money and diversion of funds,” said Mr Mwale during the PAC meeting on March 25, 20026.
Webmasters had initially been engaged to provide Software Development and Maintenance Support Services, but later brought in Pesa Flow Limited and Olive Tree Media to offer support and maintenance.
During the PAC meeting, National Treasury Principal Secretary Dr Chris Kiptoo disclosed that the account was opened without his authority, and when he got wind of it, “I froze it.”
“When the matter came to the attention of the National Treasury, a letter was written to Equity Bank Limited requesting details of the agency accounts and gave instructions to freeze them. The accounts were frozen, and the funds in those accounts were withheld,” Dr Kiptoo said.
Treasury Principal Secretary Chris Kiptoo.
The audit covered the financial years 2021/22, 2022/23 and 2023/24.
The overall objective of the special audit was to assess measures put in place in the government digital payments platform to enhance revenue collection by Ministries, Departments and Agencies (MDAs) and counties.
The audit involved a review of processes at the GDP unit, the Directorate of eCitizen services, ICT Authority and MDAs, analysis of data maintained by the eCitizen platform and review of the impact of onboarding on revenue collection and service delivery by MDAs.
It also involved walk-through tests of payments, document review, data analysis and interviews with key staff.
The audit shows that at the time of the audit, the Pesaflow account had receipts amounting to Sh68,719,877 and USD48,142,844, about Sh6.24 billion.
The audit shows that in the 2020/21 financial year, Sh7.84 million and USD5.86 million got deposited in the account.
In the 2021/22 period, Sh60.88 million and USD29.73 million got banked in the Pesaflow account.
In the 2022/23 fiscal year, no Kenyan currency was banked in the account, but USD12.6 million got deposited compared to the 2023/24 period, which did not record any deposits.
The PS, in the company of PSs Dr Belio Kipsang (Immigration and Citizen Services) and Mr John Tanui (ICT), did not, however, reveal whether the frozen amount is the same amount that was banked in the account.
The audit reveals that when the auditors requested the bank statements of the Pesaflow, the management of the bank did not provide them, raising questions over whether the money was retained in the account or withdrawn immediately after the deposits were made.
The bank’s failure to provide the statements of the account also means that the auditors could not tell who the beneficiaries of the withdrawn money were.
“This account was not listed among the approved collection accounts by the National Treasury. In this regard, it was used to irregularly collect money,” reveals the audit.
Auditor-General Nancy Gathungu at a meeting in Mombasa County on February 4, 2025. In a report, the Auditor-General notes a worrying trends of ethnic and disability bias and irregularities in employment practices in Tana River County.
The audit further reveals that “the total amount irregularly collected using the 'Pesaflow' account was not established as the bank statement for this account was not provided for audit.”
Sections 75 and 76 of the Public Finance Management (PFM) Act give the Cabinet Secretary for National Treasury and Economic Planning the mandate to appoint receivers of Revenue.
The law further states that the receivers of revenue may appoint collectors of revenue to collect revenue on behalf of and remit it within three days.
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Further, Executive Order No.2 of 2023 established the government digital payment unit as one of the institutions under the National Treasury, mandated to manage the revenue collected under the eCitizen platform.
Other than the unauthorized diversion of public funds, the audit exposes irregularities and weaknesses that include irregular payments of the eCitizen platform support and maintenance contract, unaccounted receipts in statement accounts, unauthorized transfers from Mpesa Paybill no.222222.
The audit reveals that all collections paid using Paybill 222222 were expected to be auto-transferred to the settlement account held at KCB Bank.
But according to the audit, review of the 222222 Paybill statements revealed that on January 25, 2024, there were four transactions worth Sh127.9 million made from the Paybill account to private entities instead of the designated settlement account.
“No documentation was provided to support these transfers of money directly from the Paybill to the private entities,” the audit reads, adding that it was contrary to Article 201 of the constitution on public finance that requires public funds to be used prudently and responsibly.
The idea to digitize revenue collection in Kenya was an initiative of the government of Kenya.
The development was financed by the World Bank through its International Finance Corporation (IFC) intermediary, which contracted Webmasters Kenya Limited to provide software development and maintenance support services.
In 2017, the IFC handed over instruments, including contracts, source code, business case and handover notes to the National Treasury.
This saw the government officially take over the possession and ownership of the platform in August 2017.
However, it was established that on January 13, 2023, the Ministry of Information Communications and Digital Economy and Webmasters Kenya Limited entered into a handover agreement where Webmasters, being the vendor of the e-citizen platform, agreed to unconditionally hand over the platform to the government.
“It was not explained how the ownership and control of the e-citizen platform ended up back in the hands of the vendor after having already been handed over to the National Treasury by OIFC in 2017,” the audit reads.
This, even as the audit accused the National Treasury of failing to provide “some key documents and information required for the audit.”
“This limitation primarily impacted the assessment of the adequacy and effectiveness of IT controls designed to protect information assets,” the audit reads.
It was also established that despite the transfer of ownership by Webmasters Kenya limited in January 2023, the government did not obtain full control of the systems, “resulting in continued over-reliance on the vendor.”
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