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"speaker_name": "Mr. Muturi",
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"content": "Mr. Temporary Deputy Speaker, Sir, another issue I want to point out is with regard to what is contained in the Public Audit Act, which we passed here in 2003. Under that Act, in Section 39, we provide that:- \"The Controller and Auditor-General may appoint any private audit firm to carry out audit of any State corporation. Once that appointment has been made, the appointed audit firm must report to the Controller and Auditor-General who must sign those audit reports.\" It is the Controller and Auditor-General, both under the Public Audit Act and also the State Corporations Act, who has the authority to sign. But we found out--- I suppose it could have been one of the so-called teething problems of any new arrangement, particularly with regard to the Kenya-Re--- Their accounts were examined by a firm known as KPMG on appointment by the Controller and Auditor-General, but because they were used to reporting to Kenya-Re directly, notwithstanding the appointment and the clear terms of the letter which was produced before the Committee by the Controller and Auditor-General--- It reads:- \"Upon doing the audit, you will report to me.\" That is what is provided for in the Public Audit Act which we passed here in 2003. But, contrary to that, KPMG gave their audit report straight to Kenya-Re, who went on to publish that report as duly passed by the Controller and Auditor-General. That is in direct contravention to Section 39(3) of the Public Audit Act - indeed, even up to Section 39(6). Once they do so, they breach the law. Mr. Temporary Deputy Speaker, Sir, we appreciate that the Controller and Auditor-General may not have the capacity, as it is now, to audit all the State corporations which now run. We thought they were reducing then but now, they appear to be increasing, especially after the passage of the very many Bills that we passed recently. We created several other new State corporations even though some of them are merely regulatory. But, nevertheless, this Committee abhors that practice. October 2, 2007 PARLIAMENTARY DEBATES 4269 Mr. Temporary Deputy Speaker, Sir, we know that unless the Minister for Finance comes to this House with some amendments to the law, the National Bank of Kenya (NBK) and the Industrial Development Bank (IDB), which I think has been sold off, but as we did this Report, it was still there--- It was observed by the Committee that their audited accounts were never presented to this House. We have pursued the matter with the Controller and Auditor-General, who told the Committee that they did the audit and forwarded their report to the Minister for Finance, who was, in turn, expected to come and lay them here on the Table and not keep them at the Treasury. I think they are the Reports for 2005/2006 or thereabouts. The Minister for Finance has, however, not brought those reports here. It is against the law for him not to forward those reports. If this practice continues, this House may be asked to amend the law so as to allow the Controller and Auditor-General to file in their reports straight to Parliament. This is because we do not know what reasons the Minister has. We suspect that because of some of the bail-outs that the Minister was advancing towards the National Bank of Kenya (NBK), perhaps, they may not have wanted those reports to be laid on the Table in this House and become public knowledge because of certain other issues that they may have wanted to sort out before they begin doing so. We only want to encourage the Minister to follow the law. The Public Audit Act is not a very old law. It was only passed here in 2003, which is when the Minister came to Parliament. We want the Minister to grow with that Act so that he can find it easier. It is like the way a toddler grows from crawling, standing and eventually beginning to walk. We, therefore, want to encourage the Minister, especially, with regard to those corporations. Mr. Temporary Deputy Speaker, Sir, there is need for the Minister to rethink the issue of the banks. We appreciate that certain disclosures by banks could lead to very disastrous consequences. However, if the law provides for that, you cannot hide reports because it is likely to lead to certain dangerous consequences. The best way to go about it - we want to advise the Minister - is to amend the law so that public corporations or parastatals, which are of banking nature, are not obliged to make certain disclosures. We want to appreciate the fact that in some of them, some banks, for example, the NBK, some of the disclosures could send some shock-waves. We will not want a situation that will also compromise our savers in those banks. We would want them to continue operating. Mr. Temporary Deputy Speaker, Sir, I had intended to look through various recommendations, but in the interest of time and in order to give other hon. Members an opportunity to comment, I may want not to go too far. However, I may want to talk about the affairs of the Kenya Airports Authority (KAA). I would like to tell a small story, which was brought out through the evidence that was given. Mr. Temporary Deputy Speaker, Sir, between 1992 and 2003, KAA was operating on a negative balance sheet. The Authority made losses amounting to billions of shillings due Government debtors; poorly-negotiated loans, including loans from the Bank of Africa and World Bank; procurement irregularities; for example, the Anglo Leasing related Computerisation Project; and general poor management. The Authority posted a loss after tax of Kshs626,021,598 and Kshs422,424,617 in the Financial Years 2001/2002 and 2002/2003 respectively. In 2002/2003, the adjusted accumulated losses rose to Kshs3,427,788,000 from the previous year's figure of Kshs1,949,061,000. The Committee noted that the management has since embarked on an aggressive debt collection strategy, which includes collecting all the debts in the Government agencies. The Board and Management of KAA have, since 2003/2004, managed to turn around the Authority to profitability. 4270 PARLIAMENTARY DEBATES October 2, 2007"
}