NYS officials face jail term after guilty verdict in Sh791m scandal

National Youth Service Recruits on August 26, 2024 at Gilgil, Nakuru County, during their Pass-Out Parade. [PCS]

Two former National Youth Service (NYS) employees face imprisonment after they were found guilty of processing fraudulent payments, resulting in a loss of Sh791 million.

This is in relation to a road construction project at the NYS facility in Kibera, 2015.

On October 31, 2024, Milimani Anti-Corruption Court Magistrate Wendy Kagendo delivered the verdict, convicting Samuel Wachenje, the former Director of Finance, and Hendrick Nyongesa Pilisi, the Principal Supply Chain Management Officer.

This is after the office of the Director of Public Prosecutions (DPP) presented a compelling case against them.  

The prosecution’s case was supported by testimony from 41 witnesses, including former NYS Senior Deputy Director-General Adan Harakhe and Nixon Oborah, the acting Chief Finance Officer at the State Department for Planning in the Ministry of Devolution and Planning.

In its decision, the court found that between December 1, 2014, and June 5, 2015, at the NYS headquarters in Nairobi, Wachenje and Nyongesa committed a breach of trust by authorising payments without proper oversight, resulting in the loss of Sh791 million.  

“The two accused breached trust by approving payments without the necessary Ministerial Tender Committee approval,’’  Kagendo ruled.

Evidence revealed that they approved payments for goods and services that were either never delivered or were grossly inflated in value.

Nyongesa was also found guilty of creating a false document, a Ministry of Public Works Supplies Branch circular, which he allegedly forged to facilitate the fraudulent payments.

He allegedly committed this offence in collaboration with others still at large.

The evidence presented by the witnesses shows that between December 2014 and April 1, 2015, Sh791,385,000 was fraudulently paid by introducing zeros on all amounts associated with 25 transactions in the Integrated Financial Management Information System (IFMIS), along with the triplicate copies of Local Purchase Orders (LPOs) attached to the payment vouchers.

The money was paid to three companies under the name of businesswoman Josephine Kabura Irungu’s directorship.  

A significant portion of the funds, was credited to the companies’ bank accounts at Family Bank, KTDA branch, and subsequently withdrawn. 

According to court doucuments, the funds were transferred from the National Treasury to Kabura’s three firms: Form Homes Builders received Sh 218,925,000, Reinforced Concrete Technologies got Sh320,160,000, and Roof and All Trading received Sh 252,300,000.  

Testimonies from Family Bank officials, Solomon Ithamba and David Mwangi Munyori, confirmed that Sh77,000,000 of the stolen funds were transferred from the bank account of Form Homes Builders to another account at the bank.

Testimony of road construction experts, including Peninah Mwangi, indicated that the actual value of materials used for the road project was only Sh 78,857,835.

“The total cost was Sh78,857,835. This indicates a discrepancy of Sh712,527,165 between the amount paid and the actual cost of materials, which is nearly equivalent to the additional amount of Sh 712,246,500 resulting from the fraudulent activity of adding zeros,” the report of the road experts shows.

This is after the DPP through State counsel Jalson Makori urged the court to find that the entire Sh791,385,000 paid to the three companies was fraudulent and stolen from NYS.

The DPP argued that NYS had been responsible for the excavation, loading and transportation of materials to the road construction site using its trucks.

During the hearing, Oborah, the first witness, testified that on May 19, 2015, after the NYS supplementary budget of Sh3.5 billion was loaded into IFMIS, he immediately notified the authority to incur expenditure holder, Harakhe, so that funding of operations for the youth development initiatives could commence.

He further explained that on May 22, 2015, he was asked by Harakhe to provide an expenditure analysis reflecting commitments made at that time.

Civil works

On May 25, he printed an account analysis report which indicated that Sh918,393,635.30 had been committed under the budget for other infrastructure and civil works.

Oborah handed over the report to Harakhe on May 26, 2015.

The report included details of the disputed transaction numbers, which had been committed in the IFMIS on May 20.

He stated that any circulars from the Supplies Branch must first be approved by the Ministerial Tender Committee.

Additionally, he said that the Ministerial Tender Committee’s approval was missing from the process.

Wachenje and Nyogesa will be sentenced on November 6, 2024.