Inside the Sh6.4 billion payroll scam: 14 State agencies, counties implicated

Public Service Cabinet Secretary Geoffrey Ruku confirmed massive payroll fraud, though official figures put the loss at Sh6.4 billion. [File, Standard]

The Standard can authoritatively reveal the 14 most affected departments in the forensic audit into the government's payroll system that uncovered a staggering Sh6.4 billion heist.

Highly placed sources say the report fingers 14 State departments and counties in the theft out of the 53 mentioned in the audit report.

The 14 departments and counties implicated with the most severe payroll problems are Ministry of Lands, National Police Service, Internal Security Ministry, Prisons, Immigration, Basic Education, Livestock, Ministry of Health, Office of the Deputy President, State Law Office, the ICT Authority, Vihiga County and Busia County.

The revelations come as Public Service Cabinet Secretary Geoffrey Ruku and President William Ruto separately confirmed massive payroll fraud, though official figures put the loss at Sh6.4 billion.

Insiders have told The Standard that internal auditors first detected anomalies in the system before flagging the report to the Human Resources department at Ruku's ministry, which then commissioned a forensic audit.

According to highly placed sources, rogue officials manipulated the payroll by siphoning small amounts ranging from Sh30,000 to Sh40,000 per transaction through fraudulent transfer allowances, disturbance allowances, and hardship allowances accumulating the colossal Sh6.4 billion over time.

"These are people playing with the payroll. The amounts were being paid out in transfer allowance, disturbance allowance and hardship allowance," a senior official close to the investigation told The Standard. The audit report is still with DCI head Amin Mohammed who received the report days ago, is said to have tasked a team to follow up on the fraud.

Speaking on the findings of the payroll review audit, CS Ruku said the exercise uncovered numerous anomalies including employees whose records showed they had been hired before they were born and others employed before attaining the age of 18.

"There were also issues of employees or civil servants who are employed before they were born. There are also cases of employees or civil servants who are employed before the age of 18," Ruku disclosed.

The review also uncovered cases of civil servants receiving multiple salaries deposited into a single account, employees sharing bank accounts, and salary payments made to individuals without valid bank account details.

"There are those employees who are sharing bank accounts. They are employees with no bank account, but money has been paid," he added.

The audit also found that payroll manipulation was deeply entrenched across several government institutions, with forged records allowing beneficiaries to remain on the payroll while siphoning billions from taxpayers.

The National Police Service was particularly hard-hit, with auditors flagging Sh313.6 million channeled into a single personal bank account in one financial year. According to the audit, the beneficiaries could not be identified immediately.

The review also flagged Sh20 million in salary payments made to employees whose records lacked valid bank account details.

"How can we have employees in the public service, more so in the National Police, with no bank account and are getting paid?" Ruku posed.

The Department of Immigration also emerged as one of the institutions with major payroll irregularities. Officials found Sh31.5 million in salary arrears accumulated over more than six months, with no adequate supporting documents.

Investigators also identified duplicate salary payments and cases where employees were paid for periods they had not worked.

"Employees paid arrears accumulating beyond six months. Why would the government be accumulating arrears for over six months? These are the questions which need to be answered with evidence," Ruku said.

The audit exposed even more troubling findings, including employees whose dates of birth indicated they were born before 1960, raising questions about whether they were still alive or ever existed. There were also cases of payroll editors making unauthorised alterations to records, with 720 payroll editors modifying more than 4.7 million payroll records without system-generated timestamps.

A further 77 employees were found to have edited their own payroll records, a clear conflict of interest that allowed them to inflate their earnings undetected.

Irregular earnings totalling Sh5.898 billion were identified, including Sh4.336 billion in special salaries paid without proper authorisation or documentation.

President William Ruto, who chaired a Cabinet meeting at State House, Nairobi, directed the DCI to investigate the fraud, dismantle criminal networks manipulating government payroll systems, recover stolen public funds, and ensure the immediate arrest and prosecution of those found culpable.

"A sample review of 12 out of the 53 State Departments uncovered suspected payroll irregularities worth Sh6.2 billion, including unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions and fragmented payroll systems," a Cabinet dispatch read in part.

To address the loopholes, the government has directed all ministries, departments, agencies and state corporations to migrate to the Integrated Human Resource and Payroll System (IHRPS) within one month.