The ongoing looting of state agency (NCPB) seeking Sh19 billion to stay afloat

NCPB silo

The National Cereals and Produce Board (NCPD) managers have looted Sh270 million worth of fertilizers.

Never mind that the parastatal faces collapse over a Sh19 billion debt.

The Auditor General Nancy Gathungu revealed this in her latest report which covers 2019-2020.

NCPB has continued to record a decline in performance in all its operations and requires government support to continue operations.

“Management attributed the low revenues to large debts owed by the government that resulted in a shortage of working capital needed to restock trading stock,” Gathungu says in the report.

It is therefore defeatist that fertilizer worth Sh270 million (90,000 bags) would disappear from the warehouses without a trace.

The new audit report says 90,000 bags of fertilizer that were procured by the NCPB in Meru could not be traced at the stores. This was also flagged by the Auditor General

Obviously unscrupulous officials’ are at play.

How it was executed

Gathungu revealed that the purchase invoices for the fertiliser in question were raised and later cancelled, but the stocks could not be traced.

The consignment was in two batches of 45,000 bags and was said to have been acquired at Sh243 million.

Detailed checks, she adds, revealed that two sales orders were generated for Sh270 million.

The auditor states that a review of stock cards provided no evidence of the stock movement as reported in the detailed sales transactions.

“The sales were also reversed in the ERP (Enterprise Resource Planning) system with no explanation while the stocks were not traced in the stores,” Gathungu says.

Successive govts have failed to deal with this menace at NCPB.

Ruto negotiated low priced fertilizer (through subsidy) and we expect him to reign in on the culprits.

The review for June 30, 2021, further discloses that NCPB lost stock worth Sh39 million, half of which were reported at its depot in Nyansiongo.

NCPB officers attributed part of the losses to transporters, an explanation Gathungu says isn’t satisfactory.

“The management did not explain how the losses occurred since the goods were already in the depot,” she said.

“It is not clear how stock losses were treated as sales and how the stock losses for the earlier years were accounted for in the current year.”

The auditor has further called out the cereals board for understating the sales of the year by Sh181 million.

Whereas the entity captured in its financial statements that it had sold Sh736 million, the ERP system reflected sales totalling Sh918 million.

“The variance was not explained. Further, the source of the amount of sales in the financial statements could not be confirmed,” Gathungu says.

Nakuru NCPB Officials

In Nakuru, officials failed to disclose sales of maize amounting to Sh1.2 million amid revelations some 51 bags went missing.

Whereas the ERP system showed that 960 bags were sold, physical stock cards indicated sales of 2,001 bags.

A similar case was reported in Eldoret where the depot indicated sales of Sh1.2 million but the ledger at the headquarters indicated nil sales.

Gathungu further took issue with the lack of uniformity in the pricing where some commodities were set below the market price.

“In the circumstances, the accuracy and completeness of the gross sales of Sh736 million could not be confirmed,” she said.

The report tabled in Parliament recently further reveals that NCPB is on its deathbed and may not survive without government support.

The concerns followed in the wake of NCBP reporting that its sales declined by Sh886 million compared with the Sh1.6 billion it made in the year ending June 30, 2020.

Its financial health has been tested further with revelations that the entity’s operating loss increased to Sh3.1 billion from Sh1.1 billion posted last year.

“In the circumstances, the board may not internally generate enough revenue to finance its operations in future without relying on the government support,” Gathungu said.

Apart from the highlighted stock queries, NCPB has been reprimanded over inaccuracies in its inventory and store records.

Among instances flagged was in Eldoret where the stock card at the depot reflected a nil balance yet the physical count revealed there were about 500 bags in store during the review.

Running balances in the stock ledgers at Mwea and Embu depots were also found to be inconsistent with the additions and reductions of stock.

Much touted reforms at NCPB only exists on paper

Gathungu said the situation made it difficult to compare the balances in the stock ledgers against the stock card balance.

She added it is also hard, under the circumstances, to track the stock movement from the stock ledgers.

“An inspection of sampled depots revealed that the stock card for rice at Sagana depot with balance of 7,555 bags valued at Sh12.6 million was omitted from the stock take aggregation.”

“In addition, an analysis of opening stock showed balance which were classified as goods on transit. Management did not explain what comprised the goods on transit and how they were cleared during the year,” Gathungu reported.

Also flagged is an overdraft which the government took of Sh6.7 billion towards the fertilizer subsidy programme, which the auditor said is impacting on NCPB operations negatively.

This follows that the Kenya Commercial Bank continues to charge 12.5 per cent interest and 10 per cent default rate on the outstanding loan.

“The board continues to incur default charges and interest on the bank overdraft balance of Sh6,729,563,152 which may affect its liquidity,” the auditor said.

Management of NCPD is running the show Carte blanche and must not be allowed to continue.

About the author

Karecha Kamaris

Karecha Kamaris is the space between earth and heaven, the gap between ice and fire, the elementary molecule that justifies unending peace in the sea of turmoil. An 'appetite for adventure over the love of ease'.

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