President Uhuru Kenyatta arrives at Waterkloof Air Force Base, Pretoria to attend the 25th Ordinary Session of the African Union in South Africa last weekend. PHOTO | FILE
What you need to know:
Controller of Budget says overdraft facility was used to move out huge amounts of money.
Controller of Budget Agnes Odhiambo has raised the red flag over unauthorised withdrawal of Sh54 billion from the Central Bank of Kenya (CBK) to service unspecified foreign debts.
The money used to make the Goldenberg-type payment was withdrawn directly from the CBK overdraft facility contrary to the legal requirement that servicing of foreign debt be done through exchequer issues that must be signed by the Controller of Budget.
Ms Odhiambo says in the third quarter budget implementation report that she authorised the payment of Sh39.95 billion to service foreign debt but the total expenditure was Sh94.26 billion — meaning the actual expenditure was higher than what she authorised because of direct payments made from the CBK’s overdraft facility.
“The actual expenditure of Sh94.26 billion exceed exchequer issues by Sh54.31 billion. It is recommended that a special audit be undertaken by the Auditor-General to establish the cause of the difference,” the report says.
Treasury Principal Secretary Kamau Thugge said he was not aware of any payment to service foreign debt from the CBK’s overdraft facility.
He was, however, firm that no money can leave the Consolidated Fund Services (CFS) without the Controller of Budget’s authority.
“Here at the Treasury, we cannot order anybody to make payments from the CBK without following the established procedure,” Dr Thugge said.
Kenya has been racking up external debt to fund infrastructure projects, pushing the foreign debt stock to Sh1.28 trillion by end of March.
Recent debt includes the $2 billion Eurobond and the Sh425 billion concessionary loan that China advanced Kenya for construction of the standard gauge railway.
The Constitution bars any withdrawal of public funds without the approval of the Controller of Budget, who must to be guided by the law.
The Controller of Budget’s office was created as an expenditure monitor to ensure money is spent for budgeted functions and to seal loopholes for fictitious payments that characterised the infamous Goldenberg scheme.
Goldenberg and Anglo-Leasing, the two biggest financial scams in Kenya’s history, have been blamed on weak controls at the Treasury and the Central Bank.
The Controller of Budget’s report for the first nine months of the 2014/15 fiscal year paints a picture of profligacy amidst persistent calls by the Jubilee government’s top leadership for austerity.
The Presidency for example spent Sh1.1 billion on travel and hospitality; a 133 per cent rise over the Sh472 million it spent in a similar period the previous year.
The Presidency’s expenditure on hospitality, conferences and catering nearly tripled from Sh225 million to Sh700 million in the nine-month period ending March 2015.
The travel budget rose from Sh246 million to Sh400 million. The jump comes on the back of recent criticism of the huge delegations that accompany the President on numerous foreign trips, straining the taxpayer.
The Ministry of Foreign Affairs has since released a list of all the trips made by President Uhuru Kenyatta and outlined what it says are the accruing benefits. It, however, did not indicate how much was spent on each trip.
Ms Odhiambo’s report also shows a substantial increase in the amount of money that Members of Parliament spent on foreign trips even as they constantly attacked the profligacy of county governments.
The combined travel budget for the 416 legislators and the parliamentary staff under the Parliamentary Service Commission rose from Sh1.9 billion in 2013/14 to Sh2.6 billion in the nine months of the current year.
Domestic trips took the lion’s share of the travel budget. But foreign travel also rose substantially from Sh343 million to Sh569 million.
“Domestic travel expenditure by the Parliamentary Service Commission accounted for 51.5 per cent of the aggregate domestic travel expenditure by the MDA (ministries, departments and agencies),” says the Controller of Budget’s report.
The MPs’ foreign travel budget could still rise significantly in the coming financial year if they manage to have the Salaries and Remuneration Commission (SRC) grant them higher perks they have been pushing for.
Travel allowances for MPs were slashed by the salaries team in December to be in line with global benchmarks and help the State curb rising recurrent expenditure but parliamentarians are seeking a review of the night-out allowances.
Also tracking the President’s extensive external travel in the nine-month review period was the Ministry of Foreign Affairs, whose foreign travel budget nearly doubled from Sh435 million in 2013/14 to Sh860 million in the current fiscal year.
This accounted for 37.4 per cent of the foreign travel budget by the national government.
The Foreign affairs ministry is the one that foots the bill for the members of the President’s delegation during a foreign trip.
The rise in the travel and hospitality budgets flies in the face of last year’s austerity calls.
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