MPs query Sh450m pay to British pensioners

Kenya has paid over Sh450 million to 442 British colonial pensioners in the last six years. This has prompted Parliament to question the decision to use taxpayers’ money to pay civil servants who served the country more than 45 years ago and whether the money is not ending in ghost pensioners’ pockets.

Treasury remits the payments in sterling pounds through a leading development aid bank, Crown Agents Bank, which is regulated by the UK Financial Services Authority.

Ghost pockets

The remittances are in line with the Public Officers Pensions (Kenya) Agreement of 1977 signed between the UK and Kenya. Then Finance minister Mr Mwai Kibaki signed the agreement on March 29, 1977 on behalf of Kenya. Parliament’s watchdog team, the Public Accounts Committee, now seeks to establish the authenticity of the scheme as members fear that the money could be ending up in ghost pockets.

A committee member, Bonchari MP Charles Onyancha says the pensioners should be paid at the exchange rate that applied when the agreement was signed, about Sh14 per sterling pound. The pound today fetches around Sh124. The House team is considering visiting the UK to confirm the existence of the pensioners.

It is also likely to propose changes to the agreement and Acts of Parliament governing it. But, according to the agreement, any changes must be done after full consultation between the two governments. The remittances to Crown Agents Bank differ every year due to exchange rate fluctuations.

A Pensions Department public relations officer, Mr Michael Bonyo confirmed that an average Sh80 million is remitted annually. In the 2002/2003 financial year, Sh68.1 million was remitted. The amount shot up to Sh77 million in 2003/2004, went down to Sh74 million in 2004/2005, then increased to Sh79.1 million in the 2005/2006 financial year, reached its highest in 2006/2007 at Sh81.5 million and dropped by a small margin to Sh79.4 million in the 2007/2008 financial year.

The money is payable under the Compensation and Retiring Benefits order and locally, Parliament enacted four laws governing this pension scheme — the Provident Act of 1951 (Cap 191), the Widows and Orphans Pensions Act Cap 192 of 1921, the Asiatic Widows and Orphans Pensions Act Cap 193 of 1977 and the Asians Officers Family Pensions Act Cap 194 of 1942.

Questions about the authenticity of the pension claims have arisen following revelations by the Controller and Auditor General that documents to support the identity and existence of the pensioners had not been made available for audit and verification.

In his 2007/2008 report to Parliament, the Controller and Auditor General questions whether the pensioners really exist, noting that he had been observing the trend in the funds’ release over the past financial years. The report seeks details of documents that confirm the existence of the pensioners like life certificates and returns, passports and other identification papers.

Daily Nation learnt from the pension secretary in the Finance ministry, Ms Anne Mugo that Crown Agents Bank sends statements to Treasury every month on payments made and informs the Kenya government of officers who have died and struck off the payroll. “The number has been going down over the years as some of them die,” she said.

PAC is concerned, however, that the pensioners’ families may not be informing the bank when eligible members die. Eligible officers covered under the scheme served under various East African bodies such as the EA High Commission, EA Commons Services Organisation, EA Posts and Telecommunications, EA Railways and Harbours Administration and the Harbours Corporation.

The financial secretary in the ministry of Finance, Mr Mutua Kilaka said Treasury will send questions to Crown Agents Bank they should expect should the Kenyan team go to the UK. Some of the things the PAC team will want is evidence of the existence of the officers including the capacities in which they served, how the pension was calculated, records showing how many are alive and their life certificates.

“We wish to establish that we are paying legitimate pensioners of the Government of Kenya,” committee member Edick Anyanga while Mr Onyancha said it was important to verify the documents with Crown Agents Bank. “The visit must be made as this is an expenditure we have been making over the a long period of time and we need to verify the documents of Crown Bank,” Mr Onyancha said.

Mr Anyanga also said it was necessary to visit the bank. “Someone may have made a good deal and the money could be going to different pockets,” he said. Treasury assured the committee that the bank would welcome the Kenyans. “The visit is timely and we would like the issue cleared,” Mr Kilaka said.

He urged the committee to make the trip. “The committee should not cancel the trip because it is a grey area,” he said. Committee chairman Dr Bonny Khalwale had asked Treasury for more information before embarking on the trip, saying he was concerned about the huge amounts spent by Parliament and government on foreign travel. “We don’t want to go there if the information we want can be obtained here,” he said. Another member, David Ngugi said PAC seeks to clean up the pensioners’ payroll.