PAC wants Wako, MP taken to court over loss of State funds

A committee of the National Assembly chaired by Budalang'i Member of Parliament Ababu Namwamba has recommended the prosecution of Busia Senator and former Attorney General Amos Wako and Kuresoi South Member of Parliament Zakayo Cheruiyot for alleged abuse of office over purchase of cars for the police 17 years ago.

The Public Accounts Committee (PAC) also wants the wife of former Vice President and Coalition for Reform and Democracy (CORD) principal Kalonzo Musyoka  forced to refund the Government over Sh6.9 million it claims she received irregularly as salary when her husband was in office. Wako, Namwamba (ODM) and Kalonzo (Wiper) are all in CORD.

The Namwamba-led PAC will also reopen investigations into the Sh1.4 billion Anglo-Leasing payments that President Uhuru Kenyatta authorised and Sh3.6 billion paid out for the 1975 KenRen fertiliser factory that never was. 

The 29-member committee spent weeks in Mombasa compiling a report of its findings sparked by queries from the Office of the Auditor General regarding Government spending. The team returned to Nairobi a week ago and the final report may be tabled in the National Assembly this week.

Wako was Attorney General in 1997 when Cheruiyot was the Permanent Secretary (PS) in charge of Internal Security. Both are in trouble over a controversial deal to buy 520 police vehicles.

Also named is a former Finance PS Benjamin Kipkulei and some top State lawyers under the then Kanu government.

The MPs claim Wako, Cheruiyot and Kipkulei changed procurement rules. PAC has exploited a clause in Kenya's four-year-old Constitution which has a recommendation that people suspected to have misused public funds be investigated.

If the National Assembly adopts the findings of PAC, the top officials will be subject to fresh investigations by the Director of Public Prosecutions Keriako Tobiko. PAC has given Tobiko until December 31 this year to table a report of the findings.

MPs say they received statements from the accused and scrutinised Auditor General Edward Ouko's audits before making their decision.

"Out of the 361 vehicles delivered, 52 could not be accounted for by way of documentary evidence. Furthermore, advance payment was made for delivery of vehicles contrary to Government financial regulations and procedures," reads a copy of the report.

"There was collusion between parties involved in this matter to defraud the Government," the committee said.

The MPs also learned that the delivery of the vehicles was not "physically verified" and that the "procurement and distribution of vehicles under this matter was generally fraudulent and raised serious integrity and accountability issues."

PAC cited Article 226(5) of the Constitution which says public servants will be punished for approving or directing use of funds in a way that breaches the law.

"If the holder of a public office, including political office, directs or approves the use of public funds contrary to law or instructions, the person is liable for any loss arising from that use and shall make good the loss, whether the person remains the holder of the office or not," reads the article in the Constitution.

The December 1997 contract was drawn to facilitate the purchase 520 police vehicles at a cost of $11.6 million (Sh1.04 billion today) from South Korea. The payment was to be made to the local agent of the supplier, Hyundai Motors (K) Ltd.  However, it is alleged that by May 2000, the company had only delivered 361 vehicles, and so the Office of the President refused to pay.

According to the report, Wako asked the Kanu government to cancel the contract "and then claim damages for the 159 undelivered vehicles". Unfortunately, the Government had issued three promissory notes of Sh285 million each, maturing in 1999, 2000, and 2001, to guarantee payment.

But Hyundai transferred the first promissory note to East African Development Bank and assigned the remaining two to the African Export-Import Bank.

The matter lay dormant until September 2008, during President Kibaki and Prime Minister Raila Odinga's tenure. Officers from Kibaki and Raila's offices and the Treasury, then under Amos Kimunya, who was Minister of Finance, met and agreed to pay the two promissory notes totalling Sh460 million at the time.

The Grand Coalition Government argued that the two promissory notes now assigned to African Exim Bank was "a legitimate debt and the Government was obliged to pay". Wako, who was still AG, was then asked to get all the documents together and recover the money for undelivered vehicles.

The PAC plans to reopen investigations into payments of Sh3.6 billion for a fertiliser factory that was never built. The scandal has been on the country's books for the past 40 years. The fertiliser factory was to be built in Changamwe, Mombasa County.

The committee also wants a fresh look at the controversial Sh1.4 billion payment that President Uhuru Kenyatta authorised to settle accounts with two international firms associated with the Anglo-Leasing scandal.

The PAC will ask the National Assembly to push Treasury Cabinet Secretary Henry Rotich and Attorney General Githu Muigai to issue a status report on the two cases as quickly as possible. They have set a deadline of December 31 this year for the AG to report on progress in the matter.

The team also wants the Principal Secretary for the Interior Monica Juma to pursue former Vice President Kalonzo Musyoka's wife over the Sh6.9 million that she irregularly received from the taxpayer.

In its report scheduled for tabling in the National Assembly, the PAC wants Kalonzo's wife to refund the money by New Year's Eve, failure to which Rotich will have to censure Dr Juma, the Interior PS, for failing to do her job.