Lawmakers are probing why Sh1.8 billion remains locked in foreign missions’ accounts years after its allocation for development and embassy operations.
The Public Accounts Committee (PAC) is scrutinising funds held in Kenya’s embassies in Washington, Addis Ababa and London.
The query arose during a review of the State Department for Foreign Affairs' audited accounts for the year ending June 2023 by PAC, chaired by Butere MP Tindi Mwale.
Auditor General Nancy Gathungu questioned the handling of Sh1.8 billion recorded as development cash book balances abroad.
She said the funds accumulated over the years due to the ministry’s failure to surrender unutilised allocations at each financial year’s close.
In a submission to MPs, Foreign Affairs PS Korir Sing’Oei defended the funds, stating they are cash flow balances for ongoing projects, not idle money.
He explained in the brief obtained by the Star that the Sh1.8 billion was set aside for specific purposes tied to mission operations.
“In Washington, DC, the balance includes contractors’ retention monies for certified works, pending the defects liability period, and allocations for ongoing refurbishments,” Sing’Oei said.
“These funds will be transferred to deposit accounts and released directly, hence no need to factor them into the current budget” the PS explained.
The bulk of the funds is earmarked for purchasing a chancery in London.
Sing’Oei said while the property was identified and procurement finalised, the funds couldn’t be spent pending the Attorney General’s clearance to hire a conveyancing lawyer.
“Since the process was advanced, funds were retained in the mission’s deposit account awaiting the sale agreement’s execution,” he argued.
The PS acknowledged some missions failed to transfer development balances to deposit accounts on time but assured MPs the funds are secure and aligned with development priorities, dismissing mismanagement concerns.
Legislators, however, accused the ministry of failing to account for the funds, raising alarms over financial discipline and diplomatic projects.
“What is the difficulty in apportioning this figure? How do we establish how much is tied to Washington, Addis Ababa, or London?” asked Bura MP Yaqub Adow.
Aldai MP Marianne Kitany demanded more light on the London chancery procurement, seeking evidence of the contract’s signing, terms and closure.
MPs want evidence showing when the contract was signed, its terms and when it ended.
“Does it mean the procurement was undertaken without legal representation initially?” she asked.
Rarieda MP Otiende Amollo expressed concern over the prolonged delay in purchasing the London chancery despite funds being allocated years ago.
PAC first flagged the matter after discovering the mission operated on an expired lease.
Amollo explained that while no legal input was needed during procurement, conveyancing, but was quick to note that, being a foreign jurisdiction, a local UK practitioner was needed.
“In Kenya, it could be handled internally, but abroad, a conveyancing lawyer is necessary,” he added.
On the balances carried forward to the new financial year, Sing’Oei cited Regulation 56 of the Public Finance Management Regulations, which empowers accounting officers to retain resources for multi-year contracts without returning funds to the Treasury.
The PS insisted that it was the reason why some of the money is still being held in various accounts. “We are permitted to hold deposits beyond a financial year where resources cannot be fully utilised in one year,” he said.
The PS dismissed claims the Attorney General’s office caused delays, stating the matter now rests with the National Treasury.
He revealed two separate purchase attempts: the first under the previous administration collapsed due to lapsed AG consent, while the second, under the new administration, has all necessary AG approvals.
INSTANT ANALYSIS
The substantial idle funds reflect poor financial planning and inter-agency coordination, particularly between Foreign Affairs, the Treasury, and the Attorney General’s office. While regulations permit holding funds for multi-year projects, the prolonged delay in a critical purchase like the London chancery, amid operational lease expiry, signals a failure in strategic execution. The ministry’s defensiveness and MPs’ scrutiny underscore the accountability deficit and the need for tighter oversight to ensure diplomatic investments align with national interests without financial wastage.
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