Days to the August 9, 2022 General Election, Controller of Budget Margaret Nyakang’o was pushed to sign out Sh15 billion from the Consolidated Fund —Sh6 billion went to buy out Helios Investment ’s 60 per cent shareholding in Telkom Kenya, a controversial undertaking, while the balance was for some projects.
For the last few weeks, Dr Nyakang’o has been critical of wastage within the President William Ruto regime, and when she was arrested this week, some politicians read mischief.
Since independence and with an all-powerful Executive, controlling government expenditure has been a risky, thankless and frustrating job. The holders have always been under siege, with some giving in and simply playing ball.
Before his office was split, David Njoroge was, for more than 40 years, the Controller (of Budget) and Auditor-General. Until 2003, when the Public Audit Act fixed the retirement age at 65, Njoroge enjoyed security of tenure and could have served without retirement.
But how he persevered in an office that was at best ignored and at worst frustrating baffled many people. Migori MP Owino Ochola observed as much in 1998: “He is a very frustrated person. His job is extremely boring because this gentleman has been producing the reports for the past 30 years, every time telling us the various mistakes ...”
Many legislators sympathised with Njoroge, whose office would be bypassed by the Executive. At one point, Mathira MP Matu Wamae said: “If I were the Controller and Auditor General, I would resign, because, year after year, I report the same issues and nobody takes action ... I know nobody would like him to resign, because he has done a very good job. But he cannot keep on being frustrated like this. He is a human being. It is not fair to do your work well and nobody gives you credit or even acts on what you recommend. They just stare at you and the following day, they make the same mistakes.”
Whether this disregard was meant to push him out is not clear. Njoroge had since 1968 been voicing concern about the indiscipline in different government ministries, which were overshooting their budgets and later seeking parliamentary approval.
Rather than raid the Consolidated Fund, the government had in 1972 expanded the Civil Contingencies Fund, which was first set up in 1965 to meet emergency expenditures. As Finance Minister Mwai Kibaki put it, the fund “is justified [for expenditures] which cannot wait until budgeting time.” The fund was also to cater for disasters and deficiencies in the Appropriations in Aid.
But history would prove Kibaki wrong. Some of the 15 per cent compensation paid to Goldenberg came from this Civil Contingency Fund before Prof George Saitoti sought a parliamentary rubber stamp through a supplementary budget. The problem was that the money sought exceeded the limit the Civil Contingency Fund was authorised to pay.
Back to Njoroge. All these illegalities happened while he was overlooked. He controlled nothing and could only watch as unapproved spending and misallocation of resources became the norm in the Kenyatta and, later, Moi governments.
While Parliament would approve the budget, the Controller had no say on overspending beyond the approved budget. Reports on the Kenyatta and Moi governments show that unauthorised expenditure, diversion of resources, personal arrangements, and abuse of procedures were the norm.
As Njoroge found out, government officials were keen on bypassing procedures. For many years, he did not have the right to examine the accounts of parastatals, nor control their expenditure. As such, they became a haven of wastage and sites of corruption. It was not until 1985 that an auditor of State corporations was appointed.
It was during the height of the Goldenberg scandal that Kenyans would realise how unapproved withdrawals can wreck the economy. During that time, the permanent secretary at the Treasury, Dr Wilfred Karuga Koinange, was in a similar situation to the one Dr Nyakang’o found herself in last year. He was pressured (he claimed by President Moi) to write letters seeking the transfer of Sh5.86 billion out of the Paymaster General account held at the Central Bank of Kenya to pay Kamlesh Pattni’s Goldenberg International.
The Goldenberg heist would later land Dr Koinange, Mr Pattni and several senior government officials in court. They either died while awaiting trial or were set free.
Also, during the Nyayo regime, some Sh4 billion was irregularly withdrawn from the Consolidated Fund to build the Eldoret International Airport. A further Sh2 billion was withdrawn to buy the presidential jet. None of these projects had been approved by Parliament, the only authority required to withdraw monies from the Consolidated Fund. MPs were later asked to rubber-stamp the withdrawals, and again, nobody was penalised.
With Njoroge constantly raising the alarm over these expenditures and pointing them out in his audit reports, the Moi government reacted awkwardly.
In 1986, the National Assembly passed the twenty-second constitutional amendment, which removed the security of tenure for the Controller and Auditor-General. This meant that the holder of the office would serve at the president’s pleasure—a move meant to turn Njoroge into a yes-man.
Under pressure from the International Monetary Fund (IMF) and World Bank, the Moi government finally passed the State Corporations Act to impose tighter controls on parastatals’ spending. Most of them were highly in debt. But there were more withdrawals from the Consolidated Fund that Parliament later sanitised.
In November 1990, the constitution restored the security of tenure of the Controller and Auditor-General—at this time, the one-party State’s edifice of central control was falling apart. But the weaknesses of yesteryears remained. In 2000, the World Bank and IMF engineered the appointment of a “Dream Team” led by the late Dr Richard Leakey. During this period, the Controller’s office was strengthened, and some procurement processes were put in place.
There were many suggestions, too. “I think we should amend the constitution so that any civil servant who withdraws funds from the Consolidated Fund without the authority of Parliament is imprisoned for life,” suggested Kiraitu Murungi in 2001.
Finally, the experience of the Goldenberg saga informed the formation of an independent office of the Controller of Budget.
Previously, Treasury permanent secretaries would write letters seeking withdrawal of funds from the Consolidated Fund without parliamentary approval.
When debate on the new constitution picked momentum, part of it centred on the Executive’s tendency to raid the Consolidated Fund to pay cronies. Thus, the 2010 Constitution created the new office of the Controller of Budget, whose role is to oversee the implementation of the national and county governments budgets and authorise withdrawals from the Consolidated Fund. Some of the functions of this office were previously played by Treasury and others by the Controller and Auditor-General.
While no expenditure could be appropriated without an Act of Parliament and the Appropriation Act, the House had ceased to be the Custodian of the Consolidated Fund. As Parliament watched, the Consolidated Fund had, over the years, been raided to finance kickbacks and political projects. With the new constitution, only the Controller of Budget can approve withdrawals of money from the fund. But in practise, the office is turning out to be tricky.
Before her dramatic arrest, Dr Nyakang’o had exposed budgeted corruption and wastage of resources within the government. She had warned that the government’s expenditure was unsustainable. She also spoke of being pressured to take certain actions.
When former Auditor-General Edward Ouko said that Sh215 billion of Eurobond money could not be accounted for, the then Controller of Budget, Agnes Odhiambo , came to the government’s defence and said the money was deposited in the Consolidated Fund.
ODM leader Raila Odinga then questioned its absorption. “Kenya’s economy cannot absorb that kind of money in one year. It is too much. If it was used to build infrastructure, we would seeing the infrastructural developments.”
In rebuttal, then Deputy President Ruto told Citizen TV on December 22, 2016, that the money was never lost or stolen. “The issue about Eurobond money being stolen ... is utter nonsense,” he said.
The fact that the Controller of Budget could not explain Eurobond’s usage and that the Executive pressured Dr Nyakang’o to release some money indicates an office under siege—the independence notwithstanding.
