The government has lined up a forensic audit of the operations of the Kenya Meat Commission (KMC) amid concerns about probity of some past transactions at the Athi-River based firm.
The managing commissioner of the government-owned meat processor, James Ole Seriani on Tuesday invited proposals from audit firms interested in evaluating the firm’s transactions. Interested firms have until October 9 to submit proposals.
A forensic audit typically covers a wide range of issues such as suspected conflict of interest, fraud and bribery and its outcome may be used to institute legal proceedings against those found culpable. Such an audit also examines a firm’s system of internal controls to identify any flaws in the safeguard assets and check whether such weaknesses may have been abused to embezzle assets for personal gain.
The call for a forensic audit comes in the wake of a surprise transfer of KMC from the Ministry of Agriculture and Livestock to the Kenya Defence Forces (KDF) which falls under the Defence ministry.
“Following the transfer of ministerial responsibility of the Kenya Meat Commission to the Ministry of Defence by the President, you are directed to facilitate a seamless transfer of Kenya Meat Commission to the Ministry of Defence,” Agriculture Cabinet Secretary Peter Munya said in a memo dated September 7 to Livestock PS Harry Kimtai and copied to Mr Ole Seriani.
The impending forensic audit at KMC is expected to cause anxiety among officials and suppliers of the meat processor, both past and current, even as the State targets to optimise operations of the firm whose plant in Athi River currently slaughters 200 cattle per week, despite its capacity to process the same number of animals daily.
There has been concern about some financial dealings at the KMC where several top managers have been fired over the last 10 years following loss of funds running into hundreds of millions.
In May, the High Court ordered a former CEO of the KMC to refund Sh11.5 million to the firm, money which he claimed to have withdrawn, to procure livestock to supply canned meat to the KDF in Somalia.
Justice John Onyiego said in the decision that Ibrahim Haji Isaak withdrew the money but failed to account for it.
“What that means, is that he dishonestly spent the money without proper accountability hence an act of fraud and breach of public duty. I have no doubt in my mind that the defendant failed to account for the public funds to which he was duty-bound to refund to the corporation,” said the judge.
The court ordered him to refund the money with interest at court rates from 2012. Ethics and Anti-Corruption Commission (EACC) through Viola Ocharo told the court that Dr Isaak was the joint signatory to KMC’s First Community Bank account.
Court documents showed Mr Isaak went to the bank’s head office and presented a letter requesting the withdrawal of the money, which was approved. But despite agreeing that he withdrew the money, he failed to account for it, hence it could be presumed that it was used for personal gain.
The KDF meat deal scandal was captured in the Auditor-General’s report for the fiscal year 2013/14 and dated June 16,2015 which also flagged suspected irregular sale of three land parcels in Shimanzi, Mombasa and Nairobi’s Riverside and Kitusuru belonging to the KMC.
The Auditor-General’s report said there was no evidence that the land sales were approved. The parcels in Shimanzi, Riverside and Kitusuru were sold on April 2,2008, April 1, 2010 and October 29, 1999 respectively.
The Agriculture ministry has defended the transfer of the KMC to the KDF saying the move would help improve its fortunes since the military is a bid consumer of its products.
The government has in recent years stepped-up funding for the KMC as part of a wider plan to revive the livestock sector.
The State Department for Livestock spent Sh80 million out of Sh190 million that parliament had allocated last financial year on the factory upgrade. The government had previously announced that it would commence the process of selling KMC following the formation of a task force to come up with a privatisation plan.
KMC is among 26 parastatals earmarked for sale to strategic investors by the Privatisation Commission.
The State reckons that privatisation will make it economically viable and boost export of Kenya's animal products. In 2016, the government allocated Sh650 million for laying off KMC staff and upgrading its abattoir.