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MISAPPROPRIATION OF STATE FUNDS ON THE RISE, AUDITOR-GENERAL WARNS

There is massive misappropriation of taxpayers’ funds

There is massive misappropriation of taxpayers’ funds

The Auditor-General, Edward Ouko, has raised the red flag over the continuous massive misappropriation of taxpayers’ funds which he says has cost the country about Sh500 billion from 2012.

Ouko, who is tasked with the responsibility of tracking the government’s spending, has revealed that preliminary findings of his latest audit for the fiscal year 2012/13 indicate that the similar cases of questionable unaccountability that were reported in the last year’s audit, are still playing out in this year’s with the offenders remaining the same over apparently.

In an interview with the Standard, Ouko also reveals that Up to 30 per cent of the Government’s total budget in any financial year is wasted.

“Last year, Sh338 billion of the total government expenditure for 2011/2012 was unaccounted-for. The total budget for the 2012/2013 financial year stood at Sh1.45 trillion, of which 30 per cent or Sh483 billion is likely to be misappropriated, he said.”

Lax internal controls and disregard for procurement rules have been cited as the major contributors to the excessive spending and misappropriation of state funds, which is still very rampant even as the country grapples with a soaring wage bill that is threatening the economy.

PROCUREMENT FLAWS

Procurement fraud is reported to be among the leading forms of economic crimes in the country according to a recent report by PriceWaterhouseCoopers (PWC). The trend has been that the tender goes to the highest bidder where the prices are marked up so that ‘brokers’ of the ‘deal’ get their kick backs. In most cases, the tenders are awarded to companies ran by the same government officials or their friends.

The most recent public procurement scandal to be witnessed in the country is the Sh24 billion laptop project whose tender was awarded to an Indian firm, Olive Telecommunications Pvt Limited, only to be cancelled two weeks ago after an appeals board found the awarding process questionable.  It appears that the cost was inflated by Sh1.4 billion.

The Kenyan constitution maintains that; “When a State organ or any other public entity contracts for goods or services, it shall do so in accordance with a system that is fair, equitable, transparent, competitive and cost- effective,” but public officials keep disregarding this provision  for their own selfish gains at the expense of taxpayers.

Another probable scandal in waiting is the construction of the  Sh447.5bn standard gauge railway which has been mounted with controversies ranging from tendering, procurement and the cost.

The sad reality being that Kenyan taxpayers, who are struggling with the high cost of living, are forced to bear the financial burdens of these scandals.

SH350 MILLION FERTILISER

The overburdened taxpayer continues to pay dearly for ambitious ‘costly’ projects which are in most cases designed to swindle public resources or for political gains.   For instance, Kenyans are to date bearing the cost of servicing a debt of the Ken-Ren fertiliser factory that was never realized.

The government entered into an agreement with a collapsed American firm, N-Ren, to guarantee the construction of a fertiliser plant back in 1970 at a cost of Sh350 million at an interest of 8.5 per cent. The debt has since risen to Sh5.1 billion.

According to the office of the Controller of Budget, Sh731.7 million of taxpayer funds was spent on the debt in the financial year ending July 31, 2012.

The Auditor General is expected to release the 2012/2013 audit report mid next month but one thing that clearly stands out even in previous audits is the rising grave management and corruption issues in public institutions and now with the devolved system of governance, the trend is spreading to the counties.

It’s therefore crucial for the government to seal such loopholes since judging from the massive figures the country is losing; it looks like a much more viable option than just cutting salaries of top-government officials.

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