Audit flags CDF looting under the watch of MPs

A damning audit report has laid bare widespread mismanagement of the National Government Constituency Development Fund, pointing to possible loss of billions under MPs’ watch.

The report implicates dozens of constituencies in financial irregularities, unsupported expenditures and blatant violations of procurement and bursary disbursement laws.

The revelations come at a time MPs are pushing to entrench the fund in the constitution, even as questions mount over their own oversight of the billions allocated to the kitty annually.

The audit, covering the 2023-24 financial year, exposes a litany of failures, from missing bursary documents to outright disregard for legal thresholds in spending.

Auditor General Nancy Gathungu cited 86 constituencies after they failed to provide supporting documents for bursary disbursements amounting to Sh2.1 billion.

There were no acknowledgements of receipt from beneficiary institutions, and details of students’ admission numbers, leaving auditors unable to verify whether the funds reached the intended beneficiaries or not.

“Without vetting reports, beneficiary lists, or acknowledgement receipts, there is no way to confirm that these funds were used as intended,” Gathungu said.

In most cases, the list of applicants and approved schedules of bursary beneficiaries were not provided for audit.

Sub-committee vetting minutes did not indicate the number of applicants, successful and unsuccessful applicants and the reasons thereof.

In some instances, the amount allocated was less than the 25 per cent threshold, and in some cases in excess by up to 40 per cent.

“In some cases, beneficiaries on full scholarship were not evidenced with selection criteria, and there were students without evidence of admission,” the Auditor General said.

The fund also does not maintain a database of schools and colleges registered by the Ministry of Education, the report reads for some cases.

In Kitui South, Sh52 million was flagged after the audit found no lists of applicants, no vetting minutes, and no proof that schools ever received the money.

Worse, the amount allocated fell short of the mandatory 25 per cent threshold, raising concerns that deserving students were sidelined. Similar gaps were found in Kitui West (Sh50.6 million), Kanduyi (Sh62.5 million), Baringo Central (Sh61.8 million), and Embakasi South (Sh91 million).

No evidence existed of bursary committees being formed, let alone being operationalised, putting the CDF committees where MPs serve as patrons on the spot.

In Budalang’i, Sh56 million was disbursed without involving the area education officer or documenting how needy students were selected.

Other constituencies where bursary disbursements were not supported with relevant documents include Chuka Igambang’ombe (Sh20.7 million), Embakasi South (Sh91 million), Emurua Dikirr (Sh52 million), Gilgil (Sh56 million), Igembe North (Sh44.7 million), Isiolo South (Sh73 million) and Kitui West (Sh50 million).

Similar concerns were flagged in Kitutu Chache South (Sh60.8 million), Malindi (Sh65 million), Maara (Sh48 million), Mandera East (Sh39 million), and Mbeere South (Sh56 million).

Narok West also failed to support Sh45 million, Rongai (Sh65 million), Sabatia (Sh39 million), Samburu West (Sh31 million), South Imenti (Sh83 million), and Tiaty (Sh65 million).

The audit further reveals reckless financial management, with several constituencies overspending millions without approval. Kitui Rural exceeded its budget by Sh417,758, while Kasarani spent Sh21 million more on bursaries than authorised.

In Makadara, bursary allocations hit 40 per cent of the budget, violating the legal cap of 35 per cent, while Embakasi West blew past the limit by seven per cent, disbursing Sh93.5 million without justification.

“In the circumstances, the bursary over-expenditure totalling Sh21,541,991 was not approved and therefore was irregular,” Gathungu said in the case of Kasarani.

In Embakasi South, there was no evidence of formation and operationalisation of the education bursary, mock examinations and continuous assessment tests committee.

Further, acknowledgement notes or receipts by the beneficiary institutions and the bursary cheque dispatch register were not provided for audit in the accounts flagged.

Most of the transactions lacked vetting reports, list of beneficiaries, and amounts awarded.

Adverse cases where there was no bursary subcommittee were reported in Gatundu South (Sh64 million), Ikolomani (Sh44 million), Isiolo South (Sh80 million), and Kabondo (Sh50 million).

Some Sh60 million was flagged in Kajiado East, Sh40 million in Kajiado North, Sh62 million in Kanduyi, Sh87 million in Kilome, Sh70 million in Kiminini, Sh59 million in Kipkelion West, and Sh79 million in Kisauni.

At least Sh86 million was not backed in Kitui East, Sh48 million in Turkana East, Sh73 million in Runyenjes, Ruaraka (Sh42 million), Sh60 million in Lugari, Sh41 million in Kuresoi North, and Sh46 million in North Mugirango.

“There were no bursary policy guidelines, public notice calls, lists of applicants, bursary sub-committees vetting minutes and acknowledgement receipts,” the auditor said.

Meanwhile, Kajiado Central and Matungulu had Sh12.6 million and Sh3.5 million in bursary cheques, respectively, that were never cashed, while Kisauni left Sh1.1 million uncollected until the cheques expired, thereby denying students critical support.

Beyond bursaries, the audit uncovered Sh1.2 billion in unsupported expenditures, with Samburu East leading at Sh156 million and Emurua Dikirr at Sh102 million.

Procurement violations were rampant, with 53 constituencies implicated in Sh672 million worth of irregularities.

Isiolo North and Nakuru Town East awarded contracts without competitive bidding, while others hired unqualified suppliers or inflated prices beyond market rates.

“Some constituencies had no procurement plans at all,” the report notes, “while others backdated documents or paid contractors in cash, which are clear red flags for fraud.”

A number of constituencies awarded contracts to unqualified firms, prices were inflated beyond market rates, and documents were backdated.

Perhaps most alarming were the undisclosed bank accounts and unreturned project funds.

Konoin, Kaiti, and Turbo hid multiple accounts, while 136 constituencies could not account for Sh3.5 billion in project management committee balances.

Turbo alone had 30 undisclosed PMC accounts while Konoin had eight held secretly, pointing to deliberate efforts to conceal expenditure.

Another Sh548 million meant for completed projects was never returned to the main CDF accounts, a direct violation of the law.

Despite a slight drop in adverse audit opinions compared with the previous years, 91 per cent of CDFs still received qualified reports.

The auditor said the findings were a signal of persistent weak internal controls, non-compliance and mismanagement.

Statutory deductions like PAYE and NSSF went unpaid, emergency funds were diverted to non-urgent projects, and staff hiring (in 47 constituencies) ignored ethnic diversity laws.

Gathungu said the “various systemic issues affecting the NG-CDF were observed across all the constituencies”.

Apart from lack of supporting documents, value-for-money concerns in the use of public resources, governance and compliance issues were flagged.

Also flagged were unexplained pending bills and lack of effective internal controls, risk management and governance failures.

The review exposed glaring inaccuracies in the financial statements of 39 funds, with discrepancies totalling Sh610.2 million.

Even more alarming, 99 constituencies could not provide documentation to support expenditures worth Sh1.27 billion, putting the massive sums’ usage in doubt.

Samburu East topped this dubious list with Sh156.2 million in unsupported spending, followed by Emurua Dikirr at Sh102.6 million, in blatant breach of public finance management laws.

Further scrutiny revealed Sh1.33 billion in unreconciled financial variances across 64 constituencies, suggesting either accounting incompetence or potential fraud.

In another breach, 11 constituencies illegally reallocated Sh23.2 million to unauthorised expenditures without approval.

Some 115 constituency funds were found to be non-compliant with laws and regulations, flouting procurement rules, failing to remit statutory deductions, and operating without proper oversight.