Kenya's Defence, Interior ministries in a spot for diverting Sh750 million

NAIROBI, KENYA: The country's spy agency got millions of shillings from the military and the Interior Ministry under dubious circumstances, the Auditor General has revealed.

The Auditor General Edward Ouko accused the two organs of flouting the law by diverting at least Sh750 million in their budgets to the National Intelligence Service.

The military, through the Ministry of Defence gave out Sh350 million while the Ministry of Interior gave out Sh400 million to the spy network in the 2012-2013 financial year. Auditors failed to trace that money at Ulinzi House and also at Harambee House, the respective headquarters of the two key Government ministries.

They were told the money was paid to NIS, but when they went to NIS headquarters off Thika Road, they found nothing concrete to show that the money actually got to the spy agency.

In the auditor's report before the Public Accounts Committee of the National Assembly, Dr Ouko wants to be told where the money is. The only evidence he got as he scoured dozens of documents to find out the spending details was an "unsigned letter" from the NIS confirming receipt of the money.

Audit verification

The curious thing is that the NIS, whose boss is Major General Michael Gichangi (pictured), sent the letter on July 12, 2013 –almost a fortnight after the closure of the financial year. When the auditor pushed for someone in the Ministry of Interior to own up, the paper trail went cold.

"A certificate of declaration that the expenditure was incurred as required by the Minister responsible has not been provided for audit verification," the Auditor General noted in his report.

When NIS were writing the letter, Interior Cabinet Secretary Joseph ole Lenku had just finished his first month in office. But even after one year in office, the auditors never got an explanation, and that's why they have returned the adverse verdict against the ministry.

They have looked at the book-keeping and financial controls in the ministry and they insist that these are "weak" and even non-existent. As long as the money is covered with the cloak of national security, then, accountability disappears.

"...the Ministry (of Interior and National Coordination) has no controls to mitigate any risk arising from using confidential expenditure funds to supplement any officer's emoluments. There is no documentation on how the money is spent," the Auditor General said in his report.

The diversion of Sh400 million from Interior to NIS is also against the Public Finance Management Act, "which prohibits reallocation of funds from one Government entity to another."

The ministry violated the Kenya Defence Forces Act and also breached the Government's financial regulations. The auditor says military accountants adopted new accounting methods that have never been used in Government—thereby making it difficult for auditors to follow the paper trail.

When the auditors asked why the ministry sent Sh350 million to NIS, the military said they had the authority of Treasury Cabinet Secretary Henry Rotich. But even with Rotich's blessing, the law is clear that if the National Assembly approves money for a particular State Organ, that money should only be spent on that State organ.

"Payment vouchers for expenditure amounting to Sh350 million incurred at National Intelligence Service were not made available for audit review," the auditor's report reads in part.

"Further, certificate of declaration that the expenditure was incurred as required by the Minister responsible was not provided. Consequently, it was not possible to confirm that the expenditure was lawful and the funds were applied effectively as required by (the Constitution)" the report continues.

Internal control

After going through the accounting systems, the auditor general realised that the same loopholes present in the Ministry of Interior were also there at the Department of Defence because money was spent, but it was never accounted for.

The auditor general blames Defence Cabinet Secretary Raychelle Omamo, her Principal Secretary Monica Juma, and the Chief of Defence Forces, General Julius Karangi for the anomalies.

"The audit revealed that the management of the Ministry has not put in place adequate internal control to mitigate against risks arising from using confidential expenditure funds to supplement any officer's emoluments as expenditure incurred is not supported," the report reads.

The truth of the secret payments to NIS will be known when the Public Accounts Committee grills ministry officials in the presence of auditors, to get answers on what happened to the cash. The military breached Section 289 (1) and (2) of the Kenya Defence Forces Act for not keeping records of accounts.