Taxpayers bleed as state sits on Sh230bn awards

A financial crisis is unfolding inside government books, with billions of shillings in unpaid court awards continuing to accumulate interest, exposing taxpayers to growing liabilities.

Budget reports show that as of December 2025, national government ministries and state agencies were sitting on legal decrees amounting to Sh233 billion, yet only Sh7.5 billion of this amount had been paid.

The health sector bears the heaviest burden, with unsettled awards estimated at nearly Sh100 billion, some dating back to President Daniel Moi-era tenders.

Among the largest claims is a Sh58 billion award to Equip Agencies, granted in 2011 after the state failed to pay for anti-malaria drugs and equipment supplied in the 1990s.

The same supplier has another unpaid award of Sh15 billion dating back to 1999.

The Health ministry is also yet to settle Sh17 billion owed to United Medical Supplies for medical products, including throat swabs delivered between 1992 and 1993, with a large portion of the claim made up of accumulated interest.

The agriculture sector carries the second-largest liability at Sh74.8 billion, with the State Department for Agriculture accounting for Sh57 billion.

The department faces a Sh19 billion arbitration award arising from a dispute with M A Consulting Group.

Another Sh4 billion is owed to Halal Meat Products, following a Supreme Court ruling.

The original judgment, entered in 2005 for Sh1.8 billion, escalated to Sh5.2 billion after prolonged litigation. Although the amount was later negotiated down to Sh4 billion, it remains unpaid.

Outstanding awards at the Lands department stood at Sh12.9 billion, of which only Sh378 million had been settled by December 2025.

Treasury reports further show the National Police Service is yet to clear Sh1.9 billion slapped on it by various courts, while a separate claim of Sh1 billion remains outstanding against the Interior department.

The State Law Office owes litigants Sh1.4 billion, including Sh270 million awarded in a case involving Martha Karua, with Kwale Sugar also owed Sh70 million.

The Ethics and Anti-Corruption Commission (EACC) faces Sh65 million in court awards, some of which remain unresolved due to ongoing appellate proceedings.

Political parties also feature among claimants. ODM commands the largest share of a Sh5 billion award against the Office of the Registrar of Political Parties, with Sh4.9 billion still unpaid.

PNU is owed Sh5 million, while the Independent Electoral and Boundaries Commission (IEBC) is yet to settle suits totalling Sh436 million arising from cases ruled between 2013 and December 2025.

In the energy sector, the Kenya Electricity Transmission Company (Ketraco) has an unpaid award of Sh8.7 billion to a Spanish firm whose contract it terminated.

Treasury reports show the power agency has yet to pay a single shilling, with the amount accounting for most of the sector’s Sh9 billion liability.

Public administration agencies recorded court awards of Sh7.7 billion, with the National Treasury accounting for the highest share at Sh4.9 billion. The claim arose from a breach-of-contract dispute over the construction of a data centre in Nakuru county.

“There is need to reconsider allocation of resources to the sub-sectors to address these obligations to adhere to the rule of law,” Treasury noted in its report.

Agencies under the social protection sector recorded unpaid awards of Sh15.4 billion.

The sports department bore the largest share, dominated by a Sh15 billion judgment in favour of Telkom Kenya over ownership of Posta Sports Ground, alongside Sh289 million owed to Gregory International for stadium upgrades.

The environment sector had unpaid awards totalling Sh8 billion, including Sh1.6 billion linked to irrigation tender disputes, Sh1.3 billion owed by the Water department and Sh4.3 billion arising from suits against the National Environment Management Authority.

According to recent Auditor-General and Controller of Budget reports, court awards now form a significant share of pending bills across both levels of government.

Treasury data shows that while ministries and agencies are required to budget for legal liabilities, many continue to treat decrees as contingent obligations rather than fixed debts, allowing interest to accumulate unchecked.

Parliament’s Public Accounts Committee has repeatedly raised concerns over the trend, faulting ministries and counties for poor legal risk management and weak defence of cases, sometimes leading to avoidable losses.

MPs have questioned why government lawyers fail to pursue appeals promptly or negotiate out-of-court settlements, allowing interest to pile up while accounting officers rotate out of office without facing personal liability.

The crisis has gained renewed attention following recent conservatory orders by the High Court in Nakuru.

The court suspended the engagement and payment of private advocates and law firms by public entities where State legal officers are available.

The orders also barred the Controller of Budget and other officials from authorising funds for external legal services pending the outcome of a constitutional petition challenging the practice.

Petitioners led by activist Dr Magare Gikenyi and Busia Senator Okiya Omtatah argue that outsourcing legal work to private firms wastes public money.

They also posited that it undermines constitutional principles on prudent public spending and violates cost-effective procurement rules.

The Central Organisation of Trade Unions (COTU) welcomed the court’s intervention, saying reliance on external lawyers drains public resources and weakens in-house capacity, urging public entities to instead depend on State legal officers.

In a fightback, the Law Society of Kenya argued that the court order amounts to judicial overreach and risks undermining access to quality legal services.

They cited complex litigation where in-house government teams may lack specialised expertise.