Fifteen senior State officers are not servicing their mortgage loans worth Sh380 million, the Auditor-General has revealed.
Nancy Gathungu says in an audit on the State House Mortgage Scheme Fund revealed that the loans due from the 15 officers were not being serviced and had accumulated arrears amounting to Sh15.6 million.
The State in 2015 launched the Fund to finance affordable mortgage loans of up to Sh40 million for each State officer.
Top beneficiaries of the cheap housing loans are Cabinet Secretaries, governors, the Attorney General, the Secretary to the Cabinet and the Chief of Defence Forces who are each entitled to a house loan of up to Sh40 million.
Currently, there are 22 Cabinet Secretaries, Attorney-General and Secretary to the Cabinet.
The report covering the year to June 2021 cast doubts on the recoverability of Sh379,774 630 and arrears of Sh15,601,855 included in the long-term mortgage receivables.
Ms Gathungu said in a report tabled in Parliament that the statement of financial position of the State House Mortgage Scheme Fund reflects a balance of Sh2.96 billion under long-term receivables from exchange transactions (mortgage receivables) as of June 30, 2022.
“However, a review of loan records revealed that loans amounting to Sh379,774 630 due from fifteen (15) individuals were not being serviced and had accumulated arrears thereof of Sh15,601,855 as of June 30, 2021,” Ms Gathungu said.
She said no evidence of measures being taken by the management of the Fund to recover the loans was provided for audit review. Further, Ms Gathungu said no provision for the doubtful debt has been made against the mortgage receivables.
“Under the circumstances, the recoverability of the loans amounting to Sh379,774, 630 and arrears thereof of Sh15,601,855 included in the long-term receivables balance of Sh2,962,606,855 as at June 30, 2021, could not be confirmed,” Ms Gathungu said in her report.
The loans cost the senior State officers only a small fraction of the prevailing market rates of up to 12.39 per cent for the majority of Kenyans who borrow from commercial banks.
Under the regulations, Principal Secretaries, members of Independent Commissions, and holders of independent offices (Controller of Budget and Auditor General) are entitled to a house loan of up to Sh35 million each.
The loans are repaid within 20 years or before the borrower hits 70 years.