Treasury irregularly disbursed Sh149m to foreign pensioners

Auditor General Edward Ouko. Of 252 financial statements scrutinised, only six per cent got a clean report. [Photo: File]

By Jevans  Nyabiage

Nairobi, Kenya: Treasury paid Sh149 million irregularly to foreign pensioners from the Consolidated Fund contrary to set agreements, according to the Auditor General.

In what could be a scandal in the making, in the 2010/2011 financial year, the Auditor says, a total of £1,031,317.56 (Sh145.4m) was paid to European and Asian Officers’ widows from the Consolidated Fund.

 “This is contrary to the provisions of Article 4 C (i) of the agreement between the United Kingdom and Northern Ireland and the Government of Kenya which states that such pensions be paid from their respective pension schemes,” the report that covers 2011/2012 financial year adds.

 The audit reveals that a sum of £300,000 (Sh39.66m) was transferred from the Asian Officers Family Pension Fund on November 1, 2011 to cater for pension payments for the Asian Officers’ Widows in 2011/2012.

 However, European officers’ widows continued to be paid their pensions from the Consolidated Fund with a total of £26,937.84 (Sh3.8m) paid to them in that year.

 “No evidence has been provided to show that the irregular pension payments made to Asian and European widows reported in 2010/2011, totalling £1,031,317.56 (Sh145,4m) had been repaid as at June 30, 2012,” said Auditor General Edward Ouko.

Pension payments

 He said total pension payments made in contravention of the provisions of the agreement of 1977 between the two governments amount to £1,058,255.40 (Sh149m) as at June 30,2012. Treasury has not provided an explanation for the anomaly.

 The Asian Officers Family Pension Fund, whose net worth as at June 2011 stood at Sh417.2 million, has about 1,100 living members, with 37 widows in Kenya and 162 others abroad who are being paid through Crown Agents of UK.

 The European Widows and Orphans Pensions Fund that was established in 1921 has a total balance of Sh173 million and 473 living members.

During the 2010/2011 financial year, it was reported that administrative charges totaling £536,500 (Sh75.6m) had been paid to the Crown Agents Bank, in the UK as at September 30, 2011.

 However, there is no evidence that has been provided to show that these charges had been agreed upon by the two governments, as stipulated in the agreement of 1977.

 A review of the position in 2011/2012 revealed that Treasury continued to pay the quarterly administrative charges of £4,292 (Sh605,172), at an exchange rate of Sh141.

Irregularly paid

And as at June 30, 2012, a total of £12,876 (Sh1.8m) had been paid, bringing the total administrative charges irregularly paid to the Bank to £549,376 (Sh77.5m).

 During 2010/2011 and earlier years, a total of £469,891.58 (Sh66.3m) was paid to 957 pensioners residing in the United Kingdom through the Department For International Development (DFID), although the National Treasury apparently did not have records of these pensioners.

 In 2011/2012, the Treasury continued to pay these pensioners and a total of £143,198.21 (Sh20.2m) was paid to them, bringing the total pensions paid through DFID to £563,776.08 (Sh79.5m) as at June 30, 2012. 

Ouko said Treasury’s department of pensions did not provide an explanation as to why the ministry continued to pay pensions to pensioners residing in the United Kingdom through DFID, yet their existence is doubtful.

 He said the pensions paid were also not taxed contrary to the provisions of Article 4(2) of the agreement of 1977 between the two governments.