Ruaraka land saga resurfaces as Ouko flags Sh1.5 billion payment

The Sh3.2 billion Ruaraka land saga has resurfaced, with the latest audit report flagging it out as irregular.

Auditor General Edward Ouko says the property was under two mortgages when businessman Francis Mburu sold it to the Ministry of Education.

According to Ouko, in 1980s Mburu took Sh21 million and Sh165 million from Continental Credit Finance Limited and Kenya Posts and Telecommunications Corporation respectively but had not cleared them when he sold the land to the Ministry of Education.

The report tabled in the National Assembly further questions why the National Land Commission paid 15 per cent disturbance allowance for land Mburu had not developed.

The latest development could once again thrust Interior Cabinet Secretary Fred Matiang’i, Education Principal Secretary Belio Kipsang and NLC in the eye of a storm as they sanctioned the compulsory acquisition of the land on which Ruaraka Secondary and Drive Inn Primary Schools lie.

The saga, which was a hot subject of investigations by both the Senate and the National Assembly, could once again be probed by Public Accounts Committee.

The Ministry of Education then under Dr Matiang’i formally requested the NLC to commence the process, leading to the compulsory acquisition of the land after the land owner requested he be compensated.

“The Ministry of Education transferred Sh1,500,000,000 to the National Land Commission on January 22, 2018 for the purpose of the acquisition and the same was paid to the vendor on January 29, 2018 vide cheque number 000936,” reads the report.

“However, a scrutiny of certificate of postal search obtained on July 16, 2018 revealed that the property has two mortgages dated December 21, 1981 to Continental Credit Finance Limited for Sh21,000,000 and another dated July 11, 1986 to Kenya Posts and Telecommunications Corporation for Sh165,000,000. These encumbrances had not been disclosed or cleared by the time of compulsory acquisition,” it adds.

In a valuation report dated June 14, 2017, the NLC determined the area for acquisition as measuring 6.9 acres for Drive Inn Primary School and 6.78 acres for Ruaraka High School at Sh206 million per acre. This translates to Sh3,262,136,690 inclusive of 15 per cent disturbance allowance.

Disturbance allowance

However, Ouko says the valuation report reflects total valuation of Sh3,269,040,600, resulting in a variance of Sh6,903,910 which has not been explained.

“Further, justification for the 15 per cent disturbance allowance was not clear given the claimant had not developed the land. In the circumstances, I am unable to confirm whether the process of acquisition was procedural and payment of Sh1,500,000,000 made to the vendor is a proper charge to public funds,” says Ouko.

Ouko has further put NLC on the spot for paying a law firm Sh360 million on behalf of a client for interruption and loss of business for a piece of land in Mombasa.

In his latest report for the year ending June 2018, Ouko stated that although the commission paid the amount, it was not clear how the value of interruption and loss of business was arrived at since no valuation report was availed for audit verification.

“Consequently, the validity of the expenditure amounting to Sh360 million paid as compensation for the interruption and loss of business could not be confirmed,” reads the report.

The commission is also in a spot for the compensation of three parcels of land to Regional Container Freight Limited to the tune of Sh224.7 million.

According to the auditor, the valuation reports for the three parcels of land were not presented for audit and in the circumstances, the propriety of expenditure of Sh224.7 million could not be confirmed.

The auditor is also questioning the expenditure of Sh82.4 million being part of payment for the purchase of 50 acres of land valued at Sh135,470,000 for a  sanitary landfill in Murang'a County.

The money was received from State department of Housing and Urban Development. However, no signed valuation report was presented besides a handwritten draft which valued the land for Sh135,470,000 inclusive of 15 per cent disturbance allowance.

According to the auditor, the justification for the 15 per cent disturbance allowance was not provided given that the land was not occupied.

“In the circumstances, the validity of the expenditure totaling Sh82.4 million could not be confirmed,” reads part of the report.

And apart from the Mombasa land, NLC also paid Sh45.3 million to a supermarket along Thika Superhighway measuring 0.0909 for which the registered owner of the land had been compensated Sh38.2 million.

During the year under review, it was noted that although the supermarket was registered on July 16, 2015 as per certificate of incorporation, the lease agreement between the land owner and the supermarket was dated December 18, 2009.

This implies that the lease was entered into before the supermarket was incorporated. Consequently the propriety and validity of Sh45.3 million paid as compensation to the supermarket could not be confirmed.

The auditor further revealed that the commission reported total pending bills of Sh196.7 million which were not settled but carried forward to 2018-19 financial year.

Ouko explained that had the bills been paid and the expenditure charged to the respective accounts in 2017-18, the statements of receipts and payments for the year would have reflected a surplus of Sh768 million instead of the reflected surplus of Sh964.7 million for the year ended June 2018.

NLC is in trouble over questionable expenditure of more than Sh908 million for compensation of various parcels of land.