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Economy

Landowners without valid papers paid Sh1bn for SGR

Edward Ouko
Auditor-General Edward Ouko. FILE PHOTO | NMG 

The Kenya Railways Corporation (KRC) paid out more than Sh1 billion to property owners who lacked crucial documentation like national identity cards during compensation for the construction of the standard gauge railway (SGR).

A new audit shows that the money was paid to individuals who did not hold requisite documents such as national identity cards, Kenya Revenue Authority personal identification number (PIN) certificates and title deed surrender from the National Land Commission (NLC).

The money was part of payments for land acquired for the construction of the Mombasa-Nairobi section of the modern rail line.

Article 40 of the Constitution allows for compulsory acquisition while the Land Act requires public bodies acquiring private or public land to deposit the compensation money with the NLC.

The commission determines payments to affected property owners after undertaking a valuation.

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Auditor-General Edward Ouko report on the KRC books of accounts for the year to June 2018 shows that the SGR land compensation effected between December 2014 and October 2016 had several inconsistencies.

He said included in the work-in-progress value of Sh523,946,281,115 is Sh12 billion incurred on land compensation under SGR Phase 1.

“Of this amount (Sh12 billion), Sh1,043,439,889 was paid out to project affected persons without the requisite documents such as national identity cards, Kenya Revenue Authority personal identification number certificates and title deed surrender from the NLC,” Mr Ouko said.

He said compensation amounting to Sh15.8 million was paid to property owners who were entitled to only Sh1.1 million resulting in an overpayment of Sh14.7 million.

Mr Ouko said although the management subsequently recovered Sh5.7 million from the overpayment, the balance of Sh8.97 million remained outstanding as of June 30, 2018.

“In the circumstances, the probity of land compensation expenditure amounting to Sh1,052,410,875 could not be ascertained,” he said.

Mr Ouko at the same time raised the red flag on the failure by the Kenya Railways to access Sh204.5 million that is locked up in the collapsed Chase Bank Limited.

He said the balance of deposit of 25 per cent amounting to Sh20.5 million remained under moratorium when Mauritius lender SBM Bank took over Chase Bank.

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