MPs to probe Treasury over Sh28.84 billion expenditure under supplementary budgets

Members of Parliament have their eyes trained on the National Treasury over the Sh28.84 billion spent by the government before the National Assembly’s approval after an audit revealed that the funds may have been looted.

The irregular expenditure has been flagged by Auditor-General Ms Nancy Gathungu in a special audit on the national government expenditures under Article 223 of the constitution for the last nine years- 2014/15 to 2022/23 financial year.

The Article states that the national government may spend money that has not been appropriated if the amount appropriated by the National Assembly is insufficient or a need has arisen for expenditure for a purpose for which no amount has been appropriated.

On Sunday, nominated MP John Mbadi, who chairs the National Assembly Public Accounts Committee (PAC), which directed the Auditor-General to undertake the special audit revealed to the Nation that National Treasury Principal Secretary Mr Chris Kiptoo is among individuals the committee has lined up for interrogation over the questionable expenditure.

“The special audit revealed glaring irregularities involving the expenditure of the funds under Article 223 of the constitution. As a committee that requested the Auditor-General to undertake the audit, we are seized of this matter and those involved will have no room to escape,” Mr Mbadi, an accountant, said.

The Article also states that the post facto approval of Parliament for any spending under the Article brought to the National Assembly in the form of supplementary budget, shall be sought within two months after the first withdrawal of the money.

If Parliament is not sitting during the time it is required to approve the expenditure or is sitting but adjourns before the approval has been sought, the approval shall be sought within two weeks after it next sits.

Mr Mbadi noted that the fact that the expenditures would subsequently be regularized by the National Assembly via supplementary budgets presented by the National Treasury, “does not mean that those behind it are safe.”

“Those responsible will have to explain to the National Assembly why they did not spend public funds as required by law with those found culpable to face the consequences of their actions,” said Mr Mbadi.  

Ms Gathungu has specifically raised issues on the expenditures on stabilization of the refined petroleum pump programme, pending bills for National Optic Fibre Backbone Infrastructure (NOFBI) project and capitation for Junior Secondary Schools (JSS) learners.

The others include poorly constructed Competence Based Curriculum (CBC) classrooms and Medical Equipment and associated services to 17 public health institutions.

“Some of the projects funded through withdrawals under Article 223 had not been put to use,” says Ms Gathungu noting; “this kind of expenditure undermines the budgeting process as envisaged in the constitution.”

She added, “based on the findings, we can conclude that these expenditures did not justify the need for their withdrawal under Article 223 of the constitution and there was no value for money.”

The revelations by the Auditor-General are also contained in the presentation to the Budget and Appropriations Committee (BAC) of the National Assembly on the Auditor-General’s budget implementation review for the first six months of the current financial year- 2023/24.

For instance the audit notes that 7,340 learners of the sampled JSS did not receive capitation amounts despite Sh13.51 billion being disbursed.

The document notes that classrooms constructed in 215 secondary schools under the government’s CBC classroom construction project had poor workmanship and that some were not in use.

Questions have also been raised on the Sh5.32 billion paid as stabilization for advance sales of local volumes under the Stabilization of Refined Petroleum Pump programme but which had no framework.

Although Sh2.21 billion was paid as administration costs for the period ended June 30, 2023, “there was no justification for including the stabilization administration costs in the pump price buildup.”

Further, Sh3.18 billion in demurrage charges were passed on to the customers through pump prices.

The document notes that despite Sh2.5 billion and Sh551 million being withdrawn in the financial years 2018/19 and 2019/20 respectively, to settle pending bills for the NOFBI project, they were not supported with details of the expenditure incurred.

Also flagged include the Sh824.98 million for the financial inclusion fund that had not been transmitted to the telecommunications service providers for disbursement to borrowers and the medical equipment and associated services to 17 public health institutions worth Sh555.23 million.

The document indicates that two cold storage facilities in Ol Kalou in Nyandarua and Timau in Meru procured at Sh185.03 million with a capacity of 240 tonnes of potatoes, were not in operation.

The audit reveals that the government has passed two supplementary budgets in each financial year under review, except for the financial year 2019/20 where three supplementary budgets were passed.

The audit indicates that there has been “a gradual increase” in requests for funding under Article 223, from an amount of Sh1.1 billion requested in the financial year 2014/15 to Sh147.39 billion in the financial year 2022/23.

This represents 13,299 percent increase over the nine year-period. Further, between the financial years 2014/15 to 2022/23, the national government had already spent between 0.4 percent and 67.8 percent of the funds requested before seeking for the approval of the National Assembly.

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