At least 384 employees at Kenya Power forged payslips to secure loans, a new audit has revealed, exposing weaknesses in the utility’s human resource systems.
The fraud was uncovered through an internal audit, the findings of which have now been published by Auditor-General Nancy Gathungu.
The audit shows that the scheme left 361 employees with payslips reflecting deductions of more than two-thirds of their salaries, breaching labour laws and highlighting gaps in payroll controls.
“An internal investigation during the year on alleged use of forged documents by employees to obtain loans from financial institutions revealed that 384 employees acquired loans using forged payslips and Human Resource (HR) approval letters,” Ms Gathungu said in her report on Kenya Power for the 2024/25 financial year.
The report questions the reliability of Kenya Power’s payroll and HR processes, noting that financial institutions were misled into issuing loans that should not have been approved.
Legal breaches
Section 19 of the Employment Act, 2007, prohibits employers from deducting more than two-thirds of an employee’s salary.
The audit found that staff exploited weaknesses in Kenya Power’s systems to generate fake payslips and HR approval letters, with 94 percent of affected employees left earning less than one-third of their basic pay.
“Out of those, 361 employees were in breach of the statutory one-third basic salary rule. The practice highlights weaknesses in the company’s payroll and human resource approval processes, which may have facilitated deductions beyond the statutory thresholds,” the report states.
The audit does not disclose the value of loans obtained using forged documents, nor does it name the financial institutions that issued them.
Wider fraud
The forged payslips were among 33 fraudulent incidents recorded at the utility during the year. The Auditor-General noted that the cases were detected through internal audit reviews and voluntary reporting by employees and customers.
In the year ending June 2024, Kenya Power’s internal audit unit also uncovered collusion involving staff, guards at off-grid power stations and fuel transporters, leading to the theft of 1.16 million litres of fuel.
The company said rogue employees manipulated records of fuel deliveries while diverting supplies, a scheme that ran for more than two years.
An official at the utility said at least 20 employees were dismissed during the year ending June 2025 over irregularities, including fuel theft, corruption-related offences and illegal electricity connections.
Governance gaps
The Auditor-General faulted Kenya Power for lacking a tracking and monitoring mechanism to ensure implementation of recommendations arising from fraud investigations.
“There was no tracking and monitoring mechanism to follow up on the implementation status of recommendations arising from fraud investigations. In the absence of such a mechanism, management was unable to effectively assess progress, enforce accountability, or ensure closure of fraud-related control weaknesses,” Ms Gathungu said.
The report also raises concerns over board oversight, noting that it was unclear whether Kenya Power’s board regularly discussed fraud investigation reports from the security and internal audit departments. This, the Auditor-General said, limited the effectiveness of governance and oversight.”
