Taxpayers foot Sh125m rent for vacant offices

Kenyans are footing millions in rent for vacant office spaces abandoned by state officials.

A new audit has exposed a pattern of wasteful spending as top guns prioritise prestige over call to live within affordable means to beat the tough economic times.

The report reveals that five state agencies owe a combined Sh125 million in rent claims for unoccupied offices, including the Sports department, Micro-Small and Medium Enterprises, the State Law Office, the Office of the Director of Public Prosecutions and the Commission on Revenue Allocation.

Despite Sh98 million being spent to renovate three floors at Nairobi’s Maktaba Kuu Building for the Sports department, the space remains empty.

Instead, the Sports CS and PS operate from Talanta Plaza, with no plans to go back.

Auditors confirmed in September last year that the offices were unused, leaving the department with Sh63 million in rent arrears.

“No satisfactory explanation was provided for the failure to occupy the space,” Auditor General Nancy Gathungu said, questioning the Sh98 million expenditure.

Talanta Plaza, owned by the Sports Fund, also had five vacant floors, raising further concerns.

“In the circumstances, the regularity and value for money to be realised from the expenditure of Sh98 million couldn’t be confirmed,” Gathungu said in the national government audit report for the period to June 30, 2024.

The State Law Office paid Sh20 million for unoccupied space at Central Bank Pension Towers, violating the Public Finance Management Act’s principles of prudent spending.

Gathungu flagged the irregular payment, noting taxpayers received no benefit. Another Sh2 million was paid for expired regional office leases.

“The payment of rent for unoccupied office space is against the principles of prudent financial management and is contrary to the Public Finance Management Act, 2012,” the auditor general said.

Meanwhile, the MSMEs department paid Sh22 million for an office it never moved into after a June 2023 lease signing.

A local company and the state department acquired the lease of six years on June 30, 2023.

Despite a three-month rent-free period for partitioning, fittings and fixtures, the space remained vacant 15 months later.

Gathungu says at the close of the audit in November last year, the department had not occupied the premises.

Auditors questioned why the department ignored available space at the 60 per cent-occupied Kenya Institute of Business Training building.

“No explanation was given why the state department has not taken up the unoccupied space in the KIBT building but chose to lease office space elsewhere,” Gathungu said.

The Commission on Revenue Allocation paid Sh21 million upfront for Prism Towers but delayed procurement, only awarding the contract five months post-lease.

The report shows the commission entered into a lease agreement with Prism Towers starting July 1, 2023 and made an advance payment for the full year’s rent.

However, procurement began three months later and the contract was eventually awarded in December 2023, five months since the signing of the lease deal.

Gathungu deemed the rent irregular, citing wasted public funds.

“In the circumstances, value for money paid on rent of Sh21 million couldn’t be confirmed,” the auditor general said.

The DPP’s office also drew scrutiny, with three-quarters of its Kabarnet Town space unused—wasting Sh12 million—while its Mombasa office sat largely empty, costing taxpayers Sh11 million annually.

Gathungu said accounting officers must prevent wasteful spending under the law, yet millions continue to be lost in vacant.

“The law requires accounting officers to ensure public resources are used in a lawful, economical and authorised manner to prevent losses from wasteful expenditure,” the Auditor General said.

Following the flagrant abuse, the National Treasury recently directed state agencies to seek the approval of respective accounting officers when procuring spaces.

The spaces would also be subject to valuation by government valuers and be cleared by the Cabinet Secretary for Housing (presently Alice Wahome).

As per the January 23, circular lease agreements would also have to be reviewed by the Attorney General and a copy of the same filed with the National Treasury.