Kenya: How supplementary budgets are used to fleece billions from taxpayers

The Government and the opposition alike are vying to appear more outraged by recent revelations of unaccounted billions of shillings at the National Youth Service (NYS), the Health Ministry CT scanners scam as well as last week’s leak of shadowy loss of tens-of-millions at the Youth Enterprise Development kitty. Don’t be fooled!

The an estimated over Sh19.21billion dubious deals in the three institutions now paint a nerve-wracking picture of just how state officials are cheating the system to snip from hard-earned taxpayers’ sweat – a theft syndicate that has extended to County governments.

Illegal tendering and awarding of contracts to nonexistent firms owned by existing influential crooked suppliers, coupled with unrestrained bribery, are fast turning out to be a norm in most public offices, thanks to a cover-up scheme devised by Treasury and the Parliament.

A source familiar with Government’s accounting structures and budgetary allocations who offered to talk in secrecy owing to the sensitivity surrounding the planned illegal deal to acquire 37 CT scanners at a cost of Sh8.7 billion by the ministry, told this publication that the alliances within the Treasury are cajoling with a group of powerful members of parliamentary budget committee with sole intention of pocketing public funds under the disguise of supplementary budgets.

“The Treasury, the Parliament and some elements in the ministry of health continue to violate the constitution with impunity, and Parliament does not have the right to exist because it has violated article 223 of the constitution, section 23 of the pfm Act 2012,” says the official.

A supplementary budget is an application to the Parliament for surplus expenditure of public funds after the budget has been passed.

It is this clause, he says the said public institutions knowingly violated in the tendering process of mobile clinics – the 2016 Sh5Billion Health Ministry heist as well as the latest scam which was reported in May that involves the purchase of CT scan machines whose price have been inflated by more than 30 per cent under unclear statuses. In the arrangement, the ministry is to acquire 37 CT scanners at an estimated cost of Sh8.7billion each at a price of Sh235million as opposed to the market value of Sh75million.

What raised eyebrows in April when the Treasury appeared before the National Assembly Budget Committee seeking the approval of Sh8 billion in the Supplementary Budget for the procurement of the equipment, was the fact that the exchequer had already released an initial fee of Sh1.7billion without Parliament’s approval.

“This budget of scanners was neither unavoidable nor unforeseen and did not meet the criteria as is stipulated in the Supplementary appropriation and thus cannot be linked with the purchase of equipment for the construction of buildings since the two have different economic classifications,” argues the government official.

The public finance Act, Budgets and Spending (Supplementary Appropriation) says that the national government may spend money that has not been appropriated with conditions attached, namely; if the amount appropriated for any purpose under the Appropriation Act is insufficient or a need has arisen for expenditure for a purpose for which no amount has been appropriated by that Act, or if the money has been withdrawn from the Contingencies Fund.

“In any particular financial year, the national government may not spend under this Article more than ten per cent of the sum appropriated by Parliament for that financial year unless, in special circumstances, Parliament has approved a higher percentage,” reads the Act in part.

In most scandals reported, he says a similar style – supplementary budgets has been used to steal billions of shillings.

It is feared that if left unimpeded, “this country could go to the dogs keeping in mind that the perpetrators of the Afya House scandal are yet to be brought to book,” says the official, adding that the three reported scandals reported this month alone explains how fraudsters are working within crooked officials to siphon billions from state coffers and are not brought to book.

Already plans are afoot by the National Assembly Budget Committee to amend the law on leasing and direct purchase of state services to curb misuse of public resources, with the Deputy President in January directing all ministries to prepare their 2018/2019 budgets sufficiently to avoid asking for more funds in supplementary budgets.