Ghosts of CDF losses haunt Raila and eight ex-ministers

Eight former MPs including Opposition chief Raila Odinga are on the spot after the Auditor General’s report exposed fraud during their tenures.

The report shows millions of Constituency Development Fund (CDF) cash was lost through inflated contracts, overpayment and fictitious advance payments for dubious projects.

Auditor General Edward Ouko has named Lang’ata, Gatanga, Kipipiri, Kangema, Kacheliba, Voi, Galole, Lurambi and Aldai as constituencies where a lot of money was lost.

MPs are de facto chief executives of constituencies and have the final say over implementation of projects.

During the term of the 10th Parliament – between 2008 and 2013 — CDF money in these constituencies was misappropriated and records of fraudulent deals still litter their books of accounts.

There were fraudulent deals involving three companies and the Co-operative Bank of Kenya which cost CDF Sh21 million during Raila’s tenure as Lang’ata MP and the mastermind was a CDF employee.

“The fraud was perpetrated by a CDF employee between January 1, 2011 and April 30, 2012,” reads the report signed on May 2015 and has just been made public.

 CASH BOOK

Also, bursaries to needy students in the then constituency that covered Kibera slums were not paid on time. Cheques worth Sh1.3 million for the financial year 2011-12 were “unpresented”, ran stale, were not recalled and were not written back to the cash book, the audit says.

The auditor wants the current CDF management to put in place “internal controls to detect and prevent such cases from recurring”. Later, Raila served as Prime Minister.

The current CDF in Lang’ata, now under Mr Joash Olum, is also indicted over Sh26 million worth of “unauthorized payments”. At least Sh4.6 million, the auditor said, “did not have the payee details and the purpose for which the amount was paid could not be confirmed”.

Kangema CDF officials awarded a Sh16.3 million contract for construction of a library when the late John Michuki was area MP. Later, in what the auditor calls “unclear circumstances”, the cost rose to Sh19.4 million.

 NEW CONTRACTOR

In 2010, the contractor was paid the full amount and “terminated”. After that, the CDF management went to the Murang’a District Works Officer for fresh costing of the library. The officer gave a new Bill of Quantities putting the cost at Sh30.4 million. In 2011, a new contractor was identified and awarded a Sh13.9 million deal. Michuki who served as Internal Security, Transport and Environment minister died in February 2012.

When the auditors visited in late 2014, the work had been completed and the contractor paid Sh12.9 million. The total amount spent on the library is Sh32.2 million, nearly double the initial contract. The Government financial regulations allow only variations of up to 15 per cent. “It is therefore not possible to confirm whether the CDF got value for money on the project,” says the auditor’s report.

Former Information minister and Kacheliba MP Samuel Poghisio began building an office in Alale in the 2010-2011 budget. The contract was given out in June 2010 at Sh10 million. The office should have been completed by May 2011. In October 2010, the contractor was paid Sh3 million. Then in his first year, the new MP Mark Lomunokol’s CDF paid Sh2.32 million and in August 2014, it paid Sh4.4 million which works out to Sh9.72 million or 97.2 per cent of the contract sum.

When auditors visited in December 2014, the construction was halfway done, having been delayed by 43 months. The remaining balance of Sh280,000 is not enough to complete the project. Also, the 10 per cent retention fees was not withheld meaning there is a risk money may be lost in case of defects or incomplete works. CDF management has not explained the omissions.

Former Gatanga MP Peter Kenneth is also on the spot after his CDF managers paid Sh1.2 million for a funeral gear, just five days to the expiry of the term of the 10th Parliament. The money was for a hearse, trolley and lowering gear.

“However, despite full payment for the said special funeral gear on January 10, 2013 through payment voucher No. 478, the items had not been delivered by the time of conclusion of audit on September 19, 2014, approximately eight months after payment had been made. The advance payment is contrary to public procurement regulations and financial regulations,” the auditor says.

Still in Gatanga, the auditor discovered that in August 15, 2011, a sale agreement for a 0.84 ha piece of land for Sh2 million was signed. A day later, a valuation report surfaced setting the price at Sh2.3 million. In 2012, the CDF team renegotiated the contract to Sh2.2 million, but this was not recorded in the sale agreement. Nonetheless, the Sh2.2 million was paid. The land was to be used by Karangi Secondary School but when the auditors visited on September 18, 2014, the school had not occupied it. 

“The sale agreement provided that the last installment shall be paid upon obtaining the consent to transfer. However, despite full payment, there was no evidence of such consent having been obtained or transfer of the title to Karangi Secondary. Public funds may be lost in case the vendor declines to transfer the land to the school,” says the report.

In the 2012-2013 financial year, when Amos Kimunya was Kipipiri MP, CDF allocated Sh3 million for construction of a dining hall at Kipipiri School. The contract had a deadline of November 2012.  However, the cost shot up to Sh3.77 million and “later” to Sh4.5 million. In 2014, the contractor had already pocketed Sh3.14 million. The variation, the auditor said, was “irregular”, because it was above the “acceptable threshold.

During Sally Kosgei’s term as Aldai MP, two fund managers pocketed Sh1.59 million in imprest on February 17, 2012, nearly a year to the General Election. The money was supposed to be accounted for within 48 hours failure to which meant it had to be recovered from the fund managers’ salaries. But the fund managers left without accounting for the money. The constituency is saddled with the Sh1.59 million whose recoverability, the report says, is “doubtful”.

 BEGAN BUILDING

In Lurambi, during the tenure of former MP Atanas Manyala Keya, who also serves as an assistant minister, construction of an office stalled in 2011 even after Sh52.5 million had been spent on it. The CDF committee had began building the office, which was awaiting roofing, in 2008/09. 

“The building poses a danger to the environment because the place is bushy and deserted,” the auditor says. The project was last funded in the 2011/2012 budget.

In Galole, there is Sh778,359 in stale cheques that have never been presented since 2010 when Dhadho Godhana, a former assistant minister, was the MP. The cheques have not been cancelled, and they have not been written back to the cash book.

In Voi, Danson Mwazo, also set out to build an office in August 2011 and wanted it done within 24 weeks. In January 2015, the work had not been completed and the contractors were still on site. Sh4.4 million had already been spent.

Mr Mwazo is currently serving as Taita Taveta senator.