Sh131m fraud at Treasury

September 23, 2009
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, NAIROBI, Kenya Sept 23 – Fifty senior Treasury have been suspended in a multi million shilling fraud scandal dealing with donor funded projects.

Treasury’s Internal Audit Department (IAD) has uncovered five cases of fraudulent activities following a fiduciary review of twenty-five projects and trust funds supported by the World Bank.

Making the announcement on Wednesday, Finance Minister Uhuru Kenyatta said only two projects had completed the audit and preliminary findings indicated financial losses amounting to Sh131 million.

“We have taken this action so that we can recover what has been lost as well as take full action on those who it will be clearly proven took part in this scam,” he said.

Names of the suspects as well as the interim report containing cases of alleged fraud have been forwarded to the Kenya Anti Corruption Commission and the Criminal Investigations Department for investigations.

The suspects will also be required to work closely with IAD to clear their names failure to which they would be prosecuted.

The two affected projects are the Kenya Education Sector Support Programme (KESSP) and the Western Kenya Community Driven Development Project (WKCDD).

“The co-ordinating ministries of Education and Special Programmes have initiated a process of suspending all the staff who have been evidently implicated in participating in corrupt practices under the projects,” said Mr Kenyatta.

Of the missing funds, Sh80 million was meant for KESSP while Sh51 million for WKCDD.

Mr Kenyatta however said the audit was not limited to donor-funded projects and that all government initiated projects would be undergoing constant review.

 “All projects and programmes, whether funded by donors or through tax payer’s money are subject to audit when deemed necessary,” he stressed.

The Ministry of Finance recently brought all donor funded projects under the mandate of the IAD.

The Finance Minister was however mum on the remaining three cases saying he would be making a statement once investigations were complete.

Other measures taken include instructing the Accountant General to freeze accounts of both projects to enable thorough review of planned expenditure, as well as working closely with the World Bank to review project controls with the aim to strengthen them.

Mr Kenyatta was however, positive the graft case would not turn away future donor support saying the audit was a government initiative in line with its commitment to good financial governance and integrity.

“This is a signal to our development partners that Kenya is serious about its fight to ensure public resources are managed in a prudent and efficient manner,” he assured

Earlier on Wednesday the Japanese government donated a Non-Project Grant Aid (NPGA) worth 1 billion yen (Sh840million).

The Non-Project Grant Aid is budget support intended to promote economic structural adjustment efforts by the Government and mitigate economic difficulties.

Under the program Japan will provide foreign currency to Kenya for importing raw and processed materials or machineries, essential for the restructuring of Kenya\’s economy.

The Counterpart Funds, derived from the sale of the imported goods in the domestic market, will be utilized for development activities in such sectors as health and infrastructure.

Over the last five years, Japan has provided Non-Project Grant Aid amounting to Sh4.2 billion.

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