NAIROBI, Kenya, May 13 – Auditor General Nancy Gathungu has raised concerns over weak revenue controls and irregular leasing practices at Postal Corporation of Kenya after an audit uncovered millions of shillings collected from expired lease agreements without formal renewals.
The audit report for the financial year ended June 30, 2025 shows the State-owned corporation continued recognizing Sh39.3 million in rental income from 107 lease agreements whose contractual terms had lapsed, even though tenants were required to surrender the premises once the leases expired.
Auditors noted that despite the expiry of the contracts, tenants remained in occupation and continued paying rent based on outdated rates, with no evidence of renewed agreements or formal correspondence between the corporation and tenants.
“Management continues to recognize rental income amounting to Kshs.39,316,947 from one hundred and seven sampled lease agreements whose contractual terms had expired,” Gathungu said.
“There has been no evidence of formal renewal, extension or communication between the landlord and tenants of these expired leases.”
The report said the corporation was still relying on leasing guidelines signed in June 2020 that were due for review after five years, exposing weaknesses in oversight of its property portfolio.
Auditors further warned that rental charges for the expired leases had remained unchanged despite clauses allowing periodic rent escalation every two years during the lease term, potentially locking the corporation out of higher earnings amid rising property values.
The audit also questioned the manner in which the corporation leased out land and properties across its regional offices, citing lack of transparency in tenant selection and pricing of rental assets.
According to the report, Posta Kenya did not provide evidence showing that lease opportunities were publicly advertised or that competitive bidding was undertaken before awarding the leases.
Auditors also said no valuation or rental assessment reports were availed to confirm whether the agreed rental charges reflected prevailing market rates.
