The ministry has repaid Sh635.8 million but has been unable to pay back the remaining Sh478 million.
The cash was withdrawn from the NYS when the State agency operated as a department of the public service ministry.
Normally, ministries shift cash within budget items, but must seek approval from the Treasury, which in turn is expected to seek approval from Parliament within 60 days of spending if the expenditure was an emergency.
Public Service ministry irregularly borrowed Sh1.1 billion from the National Youth Service (NYS) in the year when billions of shillings were lost from the State agency through fictitious procurement.
Auditor General Edward Ouko in a report tabled before the National Assembly says the ministry has repaid Sh635.8 million but has been unable to pay back the remaining Sh478 million.
The irregular loan was borrowed in the year to June 2018 when dozens of people, including businessmen and civil servants were charged following investigations into the theft of billions of shillings from NYS.
“However, an amount of Sh1.114, 827,220 was borrowed by the State Department for Public Service and Youth without appropriate authority,” said Mr Ouko without giving details.
The cash was withdrawn from the NYS when the State agency operated as a department of the public service ministry.
Normally, ministries shift cash within budget items, but must seek approval from the Treasury, which in turn is expected to seek approval from Parliament within 60 days of spending if the expenditure was an emergency.
The approval is sought through a supplementary budget. Mr Ouko did not explain if these approval steps were breached and why the ministry borrowed the Sh1.1 billion.
Changes in law have removed NYS from being a department of the Public Service ministry, a situation that had exposed it to control by bureaucrats and politicians.
The service from December to have board of directors and CEO in changes that sought to seal managerial and operational gaps that have exposed the agency to massive looting.
The youth agency previously lacked a board to oversee the management, allowing senior staff to operate with little controls.
Former Public Service PS Lilian Omolo, ex-NYS director-general Richard Ndubai and a number of business people were in May charged with the theft of nearly half a billion shillings of public funds.
The Sh468 million scandal follows a similar scam four years ago at the same agency, which saw nearly Sh2 billion get lost.
The money that the ministry borrowed is under the NYS Mechanical Trust Fund (MTF) which was established in 2011 and meant for maintenance, repair and service of motor vehicles, plant and equipment.
“The assets of the NYS Mechanical Trust Fund are understated casting doubt on the recoverability of the debt of Sh635,899,313 million as at June 2018,” Mr Ouko says in his report.
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