Kalonzo entangled in KAA Sh50m irregular payment

The Kenya Airports Authority (KAA) made a Sh50 million advance payment to the National Youth Service (NYS) for construction of an airstrip in former Vice-President Kalonzo Musyoka’s rural home without any signed document to support the payment, the Auditor-General says.

Edward Ouko, the Auditor-General, says in a report that the agency which manages all airports in Kenya, paid the money to the NYS on July 16, 2012 but there were no documents supporting the same two years later.

Parties involved in the transaction had not signed any memorandum of understanding (MoU) by June 30, 2014, Mr Ouko says in the audit report dated April 9, 2015.

“Further, although the management has explained that the overall progress of works for Phase One was at 85 per cent as at June 2013, no evidence of progress reports were available for review and it is not satisfactorily explained why the works had taken such a long time,” Mr Ouko says in his findings.

Records show that the KAA reached an agreement with the NYS for construction of Tsiekuru Airstrip in November 2012, but the parties did not formalise the deal through the signing of an MoU as required by law.

The scope of works for phase one of the airstrip project included bush clearing and top soil stripping, cut and fill formations, drainage, gravel sub-base and base construction.

Mr Musyoka was at the time Vice-President and Minister for Home Affairs – a docket that was in charge of the NYS.

The audit report for the year ended June 30, 2014 further questions the KAA’s failure to reconcile special account statements for the Northern Corridor Transport Improvement Project, which shows that the agency received a Sh537.6 million loan from an external development partner while the Treasury’s special account statement shows that Sh317.5 million was disbursed, causing a variance of Sh220.1 million.

“In the circumstances, it has not been possible to confirm the accuracy and correctness of the total receipts of Sh544.8 million reflected in the projects statement of receipts and payments for the year ended 30 June 2014,” Mr Ouko says.

External partners

Audit queries were also raised on the Kenya Transport Sector Support Project whose statements show that the KAA received a total of Sh37 million in loans from external partners while the Treasury’s special accounts statement shows that some Sh87.9 million was received, resulting to a variance of Sh50.9 million.

“It has not been possible to confirm the correctness and accuracy of the project’s total receipts amounting to Sh38.5 million,” the auditor says.

A number of audit queries Mr Ouko has raised in the past have been repeated in the 2014 audit report, including the warning that the KAA’s assets, especially land, are at risk of being illegally appropriated by unscrupulous individuals.

“As reported in the previous year, the operating lease amount excludes plot LR 9042/688 measuring 3.29 acres in Embakasi village that had not been valued for inclusion in the financial statements because its ownership is apparently in dispute,” the Auditor-General says.

The audit report says that further examination of the KAA’s books revealed that an unregistered parcel of land measuring 0.87 acres and valued at Sh4.3 million was excluded from the operating lease amount.

The KAA has a non-current asset balance of Sh30.4 billion, including Sh5.7 billion described as operating lease.

Mr Ouko says that an undetermined value of land in Lokichogio Airport was also excluded from the balance sheet and that the Sh5.7 billion lease value includes two parcels of land at the Jomo Kenyatta International Airport that have been allocated to third parties.

At Nairobi’s Wilson Airport, the audit found that land of undetermined size and value was registered in favour of the KAA but two plaintiffs filed a civil suit in 2005 seeking to prevent the authority from demolishing or interfering with their ownership or possession of the property.

Mr Ouko wondered why the KAA had not moved in and secured title documents for the property despite the High Court’s decision on October 25, 2006 not to grant the orders sought.

“Although the authority has explained that a letter was written to the National Land Commission on March 4, 2015 requesting the commission to revoke the irregularly issued title no action had been taken as at June 30, 2014 and therefore the ownership of the property remained unresolved,” the report says.

Besides, the audit found that a portion of the Malindi Airport land had been allocated to a church but was included in the list of operating leases.

Conversely, the KAA excluded land measuring 5912.5sq.ft in the same airport it claimed had been allocated to a petroleum company.

The report also questions the stalled Embakasi estate fencing project for which the KAA awarded a contract to a company in 2009 at a cost of Sh24 million but works have never started yet the contract has not been terminated.

The auditor has also questioned the KAA’s ownership of several parcels of disputed land, including one measuring 4,674.60 hectares at Nairobi’s JKIA and over which the KAA is locked in court battles with private developers.

Mr Ouko has further repeated the unresolved audit query over Trans-Global Centre’s lease at JKIA and which the logistics firm used to secure a Sh510 million credit facility from a bank.

Questions on the construction of Terminal 4 building, parking garage, grade parking and other associated works are also featured in the audit findings.