Treasury ignores Ouko in Eurobond cash use probe

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

An audit firm hired by the government has cleared the Treasury of wrongdoing in the use of Sh250 billion Eurobond despite an ongoing investigation of the loan in the office of the Auditor-General.

Financial consultancy firm PKF says there is sufficient evidence that cash from the Eurobond were all received in the government’s main account and paid out for authorised purpose.

The verdict of the audit firms comes as Auditor-General Edward Ouko maintained last year that investigations into the receipt, issue, accounting and utilisation of the funds relating to the sovereign bond issue were still ongoing as at end of June last year.

Mr Ouko in 2014 and 2015 financial years said that Sh215 billion of the Sh280 billion debt could not be clearly accounted for. He is yet to declare the investigation closed.

But PKF reckons that the treasury stuck to law in the receipt and use of the Eurobond billions.


“The National Treasury … met the requirements of the Constitution and there is sufficient evidence that all proceeds of the Eurobond were either eventually received in the Consolidated Fund or paid out for authorised purposes,” said PKF, adding that the legal backing of the Attorney-General had also been sought.

Syndicated loan

Kenya in June 2014 floated a $2 billion Eurobond in two tranches of $1.5 billion over 10 years and a five-year $500 million bond whose proceeds it deposited in JPMorgan Chase, New York.

Mr Ouko in his 2013/14 fiscal year report said that Sh54 billion of the total proceeds was drawn to settle a syndicated loan that the government took in 2012.

The rest was earmarked for infrastructure development and budgetary support. At the time Mr Ouko said that Sh215 billion of the Sh280 billion debt could not be clearly accounted for.

PKF reckons it was hired by the Treasury to conduct the special audit due to the inability of the office of the Auditor-General to release a conclusive report on its own Eurobond inspection.

The Eurobond saga touched off a heated political debate that saw the then main opposition coalition Cord and its leader, Raila Odinga, allege that the proceeds had been embezzled, a claim the government denied.

The Treasury and PKF are yet to disclose the specific projects that were funded by the Eurobond billions as demanded by the opposition.