Economy

Rotich orders State corporations not to bank surplus cash

HENRY

Treasury secretary Henry Rotich. FILE PHOTO | NMG

Treasury secretary Henry Rotich has issued fresh orders forbidding State corporation bosses from stashing cash in secret accounts months after the distressed Chase Bank exposed the policy gap.

Mr Rotich said the chiefs are only allowed to invest their surplus cash in Treasury bills and bonds without seeking the Treasury’s nod.

“No State corporation shall open and operate bank accounts without prior approval of the Treasury,” Mr Rotich said in a circular dated December 7, citing section 28(1) of the Public Finance Management Act 2012.

“Similarly, not State Corporation should invest surplus funds in any financial institution or bank without prior approval of the Treasury other than where the investment is in Treasury bills or bonds.”

The directive comes as the Kenya Ports Authority (KPA) fights to get back Sh2.957 billion that it secretly deposited in an account operated by Chase Bank just four months before the lender was placed under receivership in April 2016.

READ: Ouko doubts KPA will recover Sh3bn held in Chase Bank

In his latest report, Auditor-General Edward Ouko said he was not certain whether the KPA money is recoverable in full.

Chase Bank has since been reopened under the management of Kenya Commercial Bank #ticker:KCB but depositors such as KPA are only allowed to access up to Sh1 million.

Mr Rotich wants all State corporations to provide details of their bank accounts, stating balances held in each by close of the year.

In yet another directive, which signals a tougher 2018 for State-owned entities, Mr Rotich has ruled out borrowing from external sources saying internal revenues must first clear outstanding debts and statutory remittances.

“The National Treasury will not give concurrence for borrowing or make recommendation for National Government guarantees of corporations which are in default of loan repayments or other statutory obligations,” he said.

Taxpayers have been forced to intervene in a number of cases where State corporations have defaulted on repaying external loans or utility bills such as water and power.