Auditor General Nancy Gathungu has confirmed previous reports that linked Kwale county and a few others for operating multiple bank accounts to aid financial malpractices.
The AG on September 4, urged counties, among them Kwale to reduce bank accounts they operate from a high of 300 to less than 10 so as to eliminate dormancy and ensure the effective utilization of public funds.
Kwale was flagged by the Controller of Budget as among counties that have unnecessary bank accounts with commercial banks. The CoB Controller of Budget found over 1,000 county bank accounts in commercial banks, in violation of the law that mandates counties to hold their funds in the Central Bank of Kenya.
Counties flagged for this practice included Bungoma, which operated 321 accounts, followed by Migori with 208 accounts, and Kwale with 165 accounts.
We should minimize bank accounts, we don’t need 300: Gathungu to counties.
Counties flagged for this practice include Bungoma, which operated 321 accounts, followed by Migori with 208 accounts, and Kwale with 165 accounts.
Speaking on Wednesday when she appeared before the Public Investments and Special Funds Committee Gathugu warned that counties risk losing track of public money as a result of operating multiple bank accounts.
The Auditor General stated that counties having more than 10 back accounts is “too much” adding that operating 300 or 200 accounts “don’t make sense to me.”
“I think we should minimize bank accounts we should have one or two expenditure accounts. We don’t need 300,” Gathungu said.
Gathungu expressed concerns about the potential for mismanagement and misuse of funds, noting that the complexity of managing numerous accounts can lead to oversight and misallocation of resources.
“First of all, you will lose track, you put money there sometimes you forget that there is money there and then you come and in some of my reports you will see there is re-allocations from this account to another account and it was set up for a fund.”
The AG further expressed concern over the existing gaps in the law which she says has given counties a leeway to create multiple accounts which argues open the door to the misuse of public funds.
Kwale County Government is still operating 63 accounts with commercial banks despite warning from the Office of the Controller of Budget.
The Controller of Budget Margaret Nyakang’o in April 2024, questioned the use of the some 63 different bank accounts in Kwale.She cited gross violation of Regulations 82(1)(b) of the PFM (County Governments) Regulations, 2015, which requires that County government bank accounts be opened and maintained at the Central Bank of Kenya
The CoB was concerned that the existence of these accounts provided an avenue for diversion of funds by respective officers in the finance department.
The CoB had recommended that the County Government to ensure that bank accounts are opened and operated at the Central Bank of Kenya as the law requires, with the exemption for petty cash and revenue collection accounts.
The Finance and Procurement departments at the county have been on the spotlight over various corruption deals.
Some reports have linked the finance office and specifically the Finance Chief Officer Thomas Alex Onduko to manipulation of documents, illegal withdrawals and manipulation of data and information to aid graft.
Onduko recently appeared before the senate committee where some serious questions were raised but due to his mischievous tactics he tried to manage some few senators.
Questions have also emerged that he is not seeing eye to eye with finance executive committee member Mr. Bakari Sebe and Onduko only takes instructions from Governor Achani.
There have also been suspected cases of revenue diversion after the CoB raised questions on the underperformance of own-source revenue at Kshs.285.34 million against an annual target of Kshs.600 million, representing 47.6 per cent of the annual target.
The County is also battling High level of pending bills which amounted to Kshs.173.12 million as of 31st March 2024, and this is expected to have grown to over Ksh 200 million by end of 2024.
In the first nine months of the 2023/25 FY, the Controller of Budget approved withdrawals of Kshs.5.59 billion from the CRF account during the reporting period, which comprised Kshs.1.11 million (19.9 per cent) for development programmes and Kshs.4.48 billion (80.1 per cent) for recurrent programmes. Analysis of the recurrent exchequers released in the first nine months of FY 2023/24 indicated that Kshs.2.55 billion was released towards Employee Compensation and Kshs.1.93 billion for Operations and Maintenance expenditure.
The available cash balance in the County Revenue Fund Account at the end of the frst nine months of FY 2023/24 was Kshs.1.20 billion.
The total amount spent during this period was greater than the amount released by the COB. The county had explained that this was due to invoices that had been validated in the system but not yet paid due to the delay in the disbursement of funds by the National Treasury.
However, a follow upon the invoices leads to suspected fraud which come of the MCAs want probed.
The CoB also put the finance department on the spot over payment of Ksh 67,794,770 for the construction of KSh600 million fruit processing plant in Kubo South ward.This was for the phase one works whose budget was Ksh 8,089,590 million.
There are suspected dubious payments related to the construction of Vukani Mulungunipa Road RFQ number 1463747/ 2023-24 where millions are believed to have been paid using unorthodox means.
This comes against a backdrop of reports that some CECMs and Chief officers have defrauded the county using companies directly linked to them.
Investigations have been ongoing to unravel how companies related to one of the executive were paid Ksh 150,610,711 million.
The companies were allegedly paid in total disregard to the Public Procurement and Asset Disposal Act of 2015.
The companies are Diani Occasions which has been paid Ksh 33,70,00 million, Mutanga Investments that has been paid Ksh 266,644,200 million and R Flink which banked Ksh 90,296,011 million. The companies are alleged associated with Francisca Mutethya Kilonzo the current County Executive Committee Member (CECM) for Social Services and Talent Management.
