The Senate’s investigation into the loss of at least Sh35 billion to ghost workers risks going up in smoke following a September 2023 High Court decision that barred counties from forming teams to probe financial books in the devolved units.
The investigation, which started in November 2022, seemingly stalled as counties dragged their feet while doing payroll audits, and has now hit a fresh roadblock with the court verdict.
While declaring illegal a task force probing Trans Nzoia County’s pending bills, Justice Anthony Mrima ruled that public institutions must consult the Office of the Auditor-General (OAG) if they intend to do a special review of financial books.
At the time, several counties under investigation by the Senate’s Public Accounts Committee (PAC) had formed task forces to audit their payrolls and promised to submit reports to the legislators.
Since identifying ghost workers and how much taxpayers have lost to the graft scheme involves probing financials, the task forces formed by governors could be made redundant by Justice Mrima’s decision. Such a scenario could in turn see beneficiaries of the Sh35 billion ghost workers scheme go scot free and keep the loot.
Even more worrying is that without action against perpetrators, counties will continue losing huge amounts of money through phony payrolls.
Waste of public resources
Homa Bay, Kisii, Nyamira, Nandi, Nairobi and Mombasa counties had stated that they would file the task force reports at the Senate before the 2022/2023 financial year closed, but none of them met the deadline. Justice Mrima’s judgment could now see many of the task force reports become another waste of public resources.
Initially, PAC summoned governors in eight counties – Vihiga, Mombasa, Bomet, Migori, Nandi, Lamu, Nairobi and Nyamira – but later opted to amend its sample list.
The Senate inquiry was sparked by a Nation investigation that revealed that taxpayers lost at least Sh35 billion to ghost workers in just eight counties during the first 10 years of devolution.
Last Wednesday, PAC chairperson Moses Kajwang’ told the Nation that Justice Mrima’s ruling could pose a legal challenge to the results of the staff payroll audits being conducted by counties in its sample list.
“They all responded, with Kisii making an appearance before the committee. In all the cases, the governors indicated that they had established task forces to audit HR and payrolls. It was the view of the committee that we should allow them to finalise the audits and then get a report on the action taken,” Mr Kajwang’ said.
“In an interesting turn, the High Court recently declared as unconstitutional any task force established for audit purposes without the involvement of the OAG. That has thrown us into a state of confusion because how do we treat the audit reports?” Mr Kajwang’ asked.
With the Senate resuming sittings on Tuesday, the watchdog committee will demand progress reports from the counties under investigation, Mr Kajwang’ said.
In an attempt to beat the legal hitch, the committee intends to ask Auditor-General Nancy Gathungu to weigh in on the task forces and the work they have done so far. This is after Justice Mrima, in his judgment, gave Trans Nzoia a chance to regularise the task force report by serving it to the Auditor-General.
If Ms Gathungu rules that the document meets the required audit standards, it will remain enforceable. That small window is what the Senate hopes can help it continue the ghost workers probe.
“Task force reports completed before the court judgment will not be thrown out (by the Senate), but the OAG will be asked to give an opinion. New task forces are the ones that will be done with the involvement of the Auditor-General,” Mr Kajwang’ said.
Since 2013, several governors have promised to end siphoning of county funds by doing comprehensive staff audits. But in many cases, the ghost worker count has gone up.
In Migori, for example, the county was paying Sh116,000 to 29 ghost workers in 2013. By 2018, the county was losing Sh7.5 million each month to 267 ghost workers. In November 2022, Governor Ochilo Ayacko said the county had at least 607 ghost workers according to an internal staff audit.
Vihiga Governor Wilber Otichilo in 2021 told the county assembly that the devolved unit had spent Sh69.5 million on staff audits, yet the graft scheme was still rampant.
At least 25 governors promised to do staff audits following their victories in the August 2022 General Election, but many are yet to make public their findings.
Aside from burning a hole through taxpayers’ pockets, the ghost workers menace has significantly contributed to 42 counties breaching the legally provided salary caps. Kenyan law provides that counties spend no more than 35 per cent of their annual budgets on salaries and allowances.
The 42 counties, a Controller of Budget report shows, spent more than 45 per cent of their annual budgets on salaries and allowances. In her report, Dr Margaret Nyakango notes that several counties are paying many workers outside their payroll systems, a loophole that could be used to siphon funds.
Payments made outside the payroll has been one of the routes rogue county staff have used to make ghost payments, masking them as settlement of dues to casual workers.
Mr Kajwang’ argued that re-introducing a reward scheme for counties that meet budget caps on salaries and allowances could motivate governors to rid their counties of ghost payments. He added that investigative agencies have not been very keen on reigning in rogue officials behind payments to non-existent staff.
“We had one (reward scheme) in the past where counties in compliance would get up to 2.5 per cent of their annual budgets. Once this stopped, the governors stopped caring,” Mr Kajwang’ said.
