Eurobond money 'earned, but no project'

Auditor General Edward Ouko.

Auditor General Edward Ouko has reignited debate on expenditure of the Sh250 billion Eurobond proceeds, faulting the National Treasury for failing to disclose the specific development projects that were financed with the funds.

In his special audit report tabled in the National Assembly by Majority Leader Aden Duale, Mr Ouko said while his office confirmed that the Eurobond proceeds were received in the country’s National Exchequer Account, how the money was utilised could not be established.

The auditor advised that in future money raised through international sovereign bonds should be earmarked and traced to specific development projects.

He said under the circumstances, his office could not ascertain if indeed all the money raised through the sovereign bond was spent on development projects as should have been the case.

The audit dismissed Treasury’s defence that the proceeds were fungible (came into one pot) at the National Exchequer Accounts in Central Bank of Kenya (CBK) and thus not identifiable to any particular infrastructure project, saying even expenditure from such pot required "traceability".

In his audit, Ouko said it was evident that some Sh196,916,669,315 was received at the account at CBK from the Federal Reserve Bank of New York in three tranches – Sh34,648,388,180 on July 3, 2014; Sh88,463,084,420 on September 10, 2014; and Sh73,805,196,715 on December 18, 2014.

The report indicated that the other balance of Sh53,201,344,900 was utilised overseas as repayment of a syndicate loan.

The report from the Auditor General differs from another one done by a private audit firm, PKF Kenya, which had cleared the deal as it dispelled any fears that there was misstatement on the part of Treasury “due to fraud or error”.