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"id": 221590,
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"speaker_name": "Mr. Muturi",
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"id": 215,
"legal_name": "Justin Bedan Njoka Muturi",
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"content": "Mr. Temporary Deputy Speaker, Sir, with regard to the National Social Security Fund (NSSF), in the accounts for the year 2001/2002, the subject matter raised by the Committee was that there be investigation and prosecution of the directors of a company known as Regent Management Limited, which is an estate agency firm, for engaging in business for which they did not qualify under the relevant law. Again, action was to be taken by the smiling Attorney-General. To date, nothing has happened. I believe he must be still smiling wherever he may be. He was here in the morning. The Kenya Wildlife Service (KWS) in their accounts for the year 1999/2000, again, this House adopted a Report by this Committee that there be prosecution of officers who abetted illegal allocation of the Corporation's land within Malindi and the area of Kisite/Mpunguti. The Attorney- General was to take action. Again, nothing has happened. Mr. Temporary Deputy Speaker, Sir, in the accounts of the Teachers Service Commission (TSC) for the year 1999/2000 was reported loss of funds through fraud and outright forgeries perpetrated by officers of the Commission. This House adopted our recommendation that there should be further investigation and prosecution of the culprits, by both the Director of CID and the AG. To date, nothing has happened. There was the issue of the National Cereals and Produce Board (NCPB) in their accounts of 1998/99 where the House had adopted the recommendation that investigations on money lost through fraud by Messrs. Alfred Kiptanui Keter and a company known as Messrs. Corigrain be undertaken by undertaken by the Director of the CID and the AG. Nothing to date has happened. On the accounts of the Investments Promotion Centre (IPC), this House adopted a recommendation that investigations on irregular payments to the former CEO, the gentleman called Dr. Joseph arap Ng'ok be undertaken. To date, nothing has happened. Mr. Temporary Deputy Speaker, Sir, I think there was also a recommendation that a serving member, indeed, a serving Cabinet Minister, who used to be an ex-employee of that institution pays some money that he owed. The only report we have received is not from the Director of CID but is from that hon. Member and Minister now, that he has repaid and is now disputing the amount because he has been repaying through a check-off system. I believe the hon. Member should be encouraged to come forward and make a report. I do not want to disclose the names. Some of them have suddenly become party leaders and it is good that--- On the accounts of the National Hospital Insurance Fund (NHIF) for the year 2000/2001, this House had adopted a recommendation that investigations be undertaken into the escalation of costs on the construction of Medicare Plaza from the initial cost of Kshs1.487 billion to excess of Kshs5 billion. Again, the Director of CID has never given a report. Further, with the accounts of the same organisation, NHIF, for 2001/2002, this House adopted a recommendation that investigations regarding overnight lending of funds to Euro Bank be undertaken by the Commissioner of Police. Again, no report has been forthcoming. Indeed, our Report - this particular Report - has been delayed. We made this Report way back in September, 2006. We were delayed, we could not even table the Report because the Treasury; the Ministry of Finance - records will bear me out - did not prepare a Treasury Memorandum on the implementation status of that 13th Report until one moth ago. It is quite clear from this that for a long time now, either the Treasury or somebody in the Government does not take the recommendations of this House seriously. The reason why I have decided to highlight this is because these recommendations have been made in the previous Report. Indeed, we made a May 16, 2007 PARLIAMENTARY DEBATES 1401 recommendation when we were looking at the accounts of the Local Authorities Provident Fund; we recommended that the AG, in consultation with the Minister for Local Government - I am happy that a former hon. Member of this Committee, who served through these recommendations is now an Assistant Minister in that Ministry, Mr. Muchiri. We hope that, as I speak now, he will take note and implement what he, himself, took part in recommending that an amendment be effected to the Local Authorities Provident Fund Act to streamline its operations. This is because what has come out over the years is that, that Fund is very poorly administered because of the weaknesses inherent in it. The people who run the Fund are appointees of the Ministry. They really have no connections with people who have retired from various local authorities. A lot of them spend so much of their time trying to look for their pension, and they do not get any sensible responses. We made a recommendation that, that Act be amended. I am, therefore, happy that hon. Muchiri is now serving in that Ministry and he will cause the Attorney-General to stop what he is known for, that is, smiling and effect the appropriate and necessary changes in order to help the pensioners who have served in various local authorities. They are suffering a great deal. Mr. Temporary Deputy Speaker, Sir, all is not lost with regard to implementation. In our past Report, while looking at the accounts of the Kenya Ports Authority, we had made various recommendations regarding many people and companies. I am happy to note that now, without having to mention all those people involved, at least, the Kenya Anti-Corruption Commission (KACC) has moved with speed to investigate and make a report regarding the affairs surrounding some contracts that had been given to a number of companies, including Mode Architects; Jaggar Consultants, which is associated with a serving hon. Member of Parliament; Multi Consults, the former Chief Executive of KPA, hon. Simeon Mkalla, and a serving Judge, Justice George Dulu, now a Judge of the High Court. Mr. Temporary Deputy Speaker, Sir, as far as it is relevant to this House, the Report by the KACC, pursuant to our recommendations which were adopted by this House reads, as follows: \"KACC/FI/NQ/55/06: Investigations by KACC established that Jaggar Consultants were appointed through the lead consultant of the project\". This was a project to build several storeys on the existing structure of KPA way back in 1994, but to-date, the headquarters has never seen the extra storeys. The Report states: \"Jaggar Consultants were appointed through the lead consultant of the project and the appointment was approved by the management of KPA. The investigations also established that in 1994, there were no clear procurement guidelines as to the manner in which consultants could be engaged. Further, the KPA rules of procurement had given the Chief Civil Engineer a free hand to make appointments in civil engineering projects\". It was also noted that the matter regarding the payment of the consultancy fee was taken to court in Civil Case No.2931 of 1997 and orders made in favour of the firm, that is, Jaggar Consultants. The file was forwarded to the Attorney-General on 23rd March, 2007, with recommendations that the same be closed in view of the fact that there were no procurement regulations regulating procurement of consultancy services and further that issues relating to the consultancy were addressed by both the High Court and the Court of Appeal. The Attorney-General's advice on the matter is awaited.\" Mr. Temporary Deputy Speaker, Sir, I commend the KACC. As you can see, again, action is on the smiling Attorney-General! He has been given the Report and it is his advice which is being awaited. In fact, we had recommended: \"While taking cognisance of the Report by the KACC, the Committee, therefore, recommends that this House asks the Attorney-General to act on the file with a 1402 PARLIAMENTARY DEBATES May 16, 2007 view to concluding this matter\". That way, the sitting hon. Member, Judge of the High Court, hon. Simeon Mkalla and all others that have been cleared by the investigations could be set free. The earlier recommendations would in effect be countermanded so that nobody lives forever with an accusation or allegation hanging round their necks. Mr. Temporary Deputy Speaker, Sir, one of the issues that the Committee, much to its chagrin, found is that the financial position of most of the examined corporations continued to be deplorable during the periods 1998 to 2002. At that time, most of those examined corporations were exempted from the provisions of the State Corporations Act, Cap.446 of the Laws of Kenya regarding public audit. Indeed, at that time, most of those firms, if not all were audited by the so- called \"internationally-reputable private audit firms\". They never raised a finger against any malfeasance in the conduct of affairs of those State corporations. Mr. Temporary Deputy Speaker, Sir, I am happy to report that since the enactment, although I will be turning to that issue a little later, by this House in 2003 of the Public Audit Act, under Section 39 of that Act, we gave powers to the Controller and Auditor-General of this Republic power to appoint private auditors to audit the affairs of public enterprises. However, the deplorable thing is that those private audit firms have a tendency of not wanting to report back to the Controller and Auditor-General in terms of Section 39 of that Act which we passed here in 2003. The net result, therefore, was that they gave and qualified clean Reports even when the Controller and Auditor-General came to discover later that actually there were irregularities happening. Mr. Temporary Deputy Speaker, Sir, one does not need to go too far. The Kenya Reinsurance Corporation was one of such corporations where the Controller and Auditor-General appointed PriceWaterHouseCoopers to audit them. Instead of giving their Report to the Controller and Auditor-General, as the law requires, they gave their Report to the firm and it was published in the newspapers that their affairs were clean. I believe the rest is history. We just saw the other day where they had given a clean bill of health, the Chief Accountant, the Finance Manager and the Chief Executive Officer have all been shown the door because of irregularities within that corporation. Had those accounts been given to our own supreme audit institution; the Kenya National Audit Office, I am sure those irregularities would have been detected. The biggest problem that we have, is that private firms hear no evil and see no evil. They are interested in their fees and nothing else. As long as the client continues to pay them their fees, they will not see any irregularities. One questions the value of those audit reports if they cannot be able to pick out such irregularities. Therefore, there is cause to question the authenticity and the appropriateness of some of the private audit reports. Mr. Temporary Deputy Speaker, Sir, another problem that we discovered as a Committee, is the appalling nature that most State corporations do not actually comply with now universally accepted international financial reporting standards in their financial reporting. Most of these corporations are mainly the regional authorities, the Local Authorities Provident Fund, the Kenya Roads Board and others. We will require as a House, to put our foot down and direct the Controller and Auditor-General to demand that all authorities and public enterprises comply with international financial reporting standards which they are expected to be aware of. The Committee also observed with some concern that the Boards of management of many State corporations, particularly those in the commercial and banking sectors have continually flouted the State Corporations Act, as well as the Public Audit Act because they have not delivered their audited reports and financial statement to be published and laid before the House. I have had occasion, this year, to raise that issue when the Minister for Finance was present. Invariably, the May 16, 2007 PARLIAMENTARY DEBATES 1403 Committee lays part of the blame on the Minister for Finance for, either, failing to compel the State corporations to comply with the law or failing to table the said reports. An example is the National Bank of Kenya (NBK) and the Industrial Development Bank (IDB). This house is yet to see the reports and financial statements of these two banks for last four years, yet, every year they call shareholders to meetings and display to them some unaudited reports. They are unaudited because they lack the requisite certification by the Controller and Auditor-General as is required by our own Public Audit Act. We acknowledge the need to harmonise the State Corporations Act, the Public Audit Act and the Banking Act, where it may be desirable that some form of secrecy especially with regard to institutions that are purely of banking nature, that certain aspects of confidential information must not be laid before the House, save through some certain arrangements by way of appearances in camera. Mr. Temporary Deputy Speaker, Sir, it is the view of the Committee that shareholders. The reason why the State corporations they are examined is that the Government is the majority shareholder in them. Their interests in such organizations like the NBK and IDB and others need to be safeguarded by allowing the necessary disclosures. Similarly, the Committee noted that some of those corporations mentioned above have been publishing their reports without the certificate of the Controller and Auditor-General. I have just given the example of Kenya-Reinsurance Corporation and the NBK. Those are major culprits. As I have said, this is in violation of Section 39 of the Public Audit Act. It baffles all of us that they are invariably given clean reports. Sometimes, when the Controller and Auditor-General audits the same firms in the subsequent years, various grievous reservations are raised. That used to happen with regard to the Kenya Pipeline Company (KPC) and the Kenya Wine Agencies (KWAL) among others. Mr. Temporary Deputy Speaker, Sir, before I conclude, let me address a few specific issues. It is observed that most of the audit reservations that we came across from the Controller and Auditor-General relate to procurement of goods and services by State corporations, the payment of sitting allowances to Board members and staff and matters to do with the way public land held by State corporations is alienated. Let me give a few examples: The Kenya Airports Authority (KAA), is one organization that has been notorious in flouting procurement rules. Before I come to what is more recent, let me give an example. In 1999, the KAA was informed of a proposal to dispose off some used baggage trollies by some Chinese airport called Kaitak in the national airport in Hong Kong. Without any pre-shipment inspection, KAA arranged to have the trollies shipped to Mombasa at a total cost of Kshs6.3 million. To everybody's surprise, when the trollies arrived in Nairobi and were handed over to the user department of the Authority, the same user department rejected them and were said to be too old, unserviceable, sub-standard and could possibly mar the image of KAA. To date, the management of KAA does not know the whereabouts of those trollies and can only guess that they were auctioned in 2002. That is what they told the Committee. They were able to fetch Kshs78,000. That is contained in our Report on Page 139. I invite hon. Members and the House to look at the Report. Mr. Temporary Deputy Speaker, Sir, another one still within KAA, in 2000/2001 had some questionable contracts relating to financial management software and computerization projects with a firm, which I believe many Kenyans know, known as Dynatech International. This firm is associated with the notorious Dr. Merylin Kettering of the infamous Anglo Leasing International. The firm under-performed in the said contract even as they were being paid over Kshs100 million. So, work had to be given to another company. That is contained in our Report in pages 122 and 124. Mr. Temporary Deputy Speaker, Sir, the Kenya Roads Board (KRB) is another one. It 1404 PARLIAMENTARY DEBATES May 16, 2007 seems that the construction of roads in this country cannot be complete without something that is now almost a cliche; the variation orders. A lot of explanations given by the Chief Executive Officer (CEO) of the KRB and his officers is that many of those variation orders emanate out of instructions given by the employer who could be the Ministry of Roads and Public Works, Ministry of Local Government, the Kenya Wildlife Services (KWS) because these are the bodies given money directly or by the DRCs. Mr. Temporary Deputy Speaker, Sir, of the 28th audit reservations raised by the Controller and Auditor-General in the accounts of the KRB for the year 2002, twenty of them were related to variation orders and failure on the part of the contractor, either not to perform or to complete on time or the employer had not paid this or the other certificate and as a consequence, the cost of the roads escalates, necessitating the said variation orders. It was astonishing to us that some of the variations resulted in contracts being varied to the extent of even up to 200 per cent. While talking about this, it is not unusual; it looks like it is the order of the day. That is within the Kenya Roads Board, at least for the year 2002. Mr. Temporary Deputy Speaker, Sir, when you talk about the Kenya Airports Authority, it is just the other day that they were doing a contract for Kshs800 million, and the same has been varied in excess of Kshs10 billion. It looks like in this country, quite apart from dealing with pending bills, we have to understand what to do with variation orders. Mr. Temporary Deputy Speaker, Sir, there was the issue of Kenya Post Office Savings Bank. With regard to this, there is a very interesting provision in the Act. The bank is a creation of an Act of Parliament, Cap.493B of the Laws of Kenya. In that Act, it is provided that where the bank makes losses, the Government will compensate it. We think that in this era of everybody being allowed to compete with others, it is unfair that the Treasury compensates the Kenya Post Office Savings Bank when it makes losses, irrespective of whether those losses are in the nature of the management being poor, or those losses being occasioned by ineptitude on the part of management, or by fraud. Mr. Temporary Deputy Speaker, Sir, there is the issue of the Kenya Tourist Development Corporation (KTDC). This is one organisation that has been extremely inept in the manner in which it collects its debts. For instance, between 1998 and 2001, the KTDC advanced loans to some persons and firms who were then said at that time to be politically correct, even without confirming their ability or capacity to repay. This is historical, but the problem still persists. This organisation is still doing the same. It is still dealing with bodies and organs that are politically correct. Mr. Temporary Deputy Speaker, Sir, I have said that a lot of the problems that we have faced have to do with implementation. It takes a lot of time, both for the Committee and the Members of this House, to go through this report, recommendations, observations and, indeed, the evidence in general. But it is a bit demoralising when you look at the Treasury Memorandum. Implementation is totally lacking. With only the exception of that one where we have talked about the Kenya Anti-Corruption Commission (KACC) making a report as it is enjoined by the law to do--- They were able to pick the report of the Committee from the House and they did their own investigations, and they have given their recommendations to the Attorney-General for advice. As to why he should be sitting on the report is anybody's guess. But if we are going to deal with issues year in, year out, we come and recommend, endorse and adopt, we should be told, because, we are not investigators ourselves; we do not have all that it takes to investigate each and every fraud, theft and other forms of mismanagement. When we make recommendations as a House, it is up to the Executive arm to implement them. Therefore, we are urging that when this report is finally adopted, we would want the Executive to move with speed to implement our recommendations. Before I conclude, I want to pay tribute to the staff of the Kenya National Audit Office and, May 16, 2007 PARLIAMENTARY DEBATES 1405 indeed, the staff of the National Assembly as well seconded to this Committee. Without their commitment to duty and invaluable advice to the Committee, it would not be possible, year in year out to come up with these recommendations. As you will appreciate, as Members of Parliament, we are burdened by so many other requirements by our constituents. So, without the technical support that we get from the members of staff of the House and the Kenya National Audit Office, as well as, indeed, from the Inspectorate of State Corporations and the Department of Government Divestiture and the Department of Government Investments and Public Enterprises, it would be very difficult for us, as Members of Parliament, to make any meaningful recommendations. Mr. Temporary Deputy Speaker, Sir, I do not intend to now examine each and every case, because if I go that route, I will be on my feet for the next one week. I consider that to be unfair to my colleagues. It would be good for me to commend this report and to thank every Member of the Committee for their patience. They sat through many long hours while considering the various recommendations and proposals, as well as the staff. With those few remarks, I beg to move and call upon the hon. Athanus Misiko Wafula Wamunyinyi to second."
}