Audit uncovers Sh198 million unsupported grants, weak land controls at ADC
Several ADC land parcels are at risk due to ongoing disputes and encroachment. One notable case involves 175 acres claimed by another entity, which contends the land was originally acquired from someone other than ADC.
A recent audit has laid bare severe financial irregularities and land management issues at the Agricultural Development Corporation (ADC), highlighting missing records, unsupported grants, and potential loss of land assets.
Auditor General Nancy Gathungu has issued an adverse opinion on ADC’s financial statements for the year ending June 30, 2024, pointing to widespread errors, omissions, and breaches in governance.
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The review found numerous unexplained prior-year adjustments, missing notes, and incomplete disclosures, with critical information such as bank account details and land ownership documents either absent or insufficient.
The audit revealed that government grants totalling Sh198 million lacked supporting documentation, making it impossible to confirm their accuracy or legitimacy.
In addition, ADC’s reported property, plant and equipment valued at Sh1.19 billion could not be verified. Large portions of this included leased farms and managed properties without proper valuation reports or proof of ownership.
Auditors also identified misclassification of biological assets, with sugarcane worth Sh43 million incorrectly listed under property and equipment.
“Valuation reports and asset inventory for buildings, fencing, water supply and leased farms were not provided for audit,” Gathungu said.
Several ADC land parcels are at risk due to ongoing disputes and encroachment. One notable case involves 175 acres claimed by another entity, which contends the land was originally acquired from someone other than ADC.
Four additional parcels were found to have been used as security for a non-performing loan of Sh340 million, putting the properties at risk of liquidation.
“The time taken so far, the interest accrued and the loan balance suggest that the loan is underperforming, which may lead to liquidation of the security by the bank,” the Auditor General warned. As of July 2023, the bank owed Sh156 million.
Further concerns emerged over land management after a lessor reportedly lost about 1,900 acres to illegal grazing. These cases underscore how ADC’s land and asset base remains vulnerable due to weak controls, legal disputes, and poor governance.
The audit paints a stark picture of a corporation struggling with financial mismanagement, incomplete documentation, and legal challenges, raising questions about its ability to protect public resources and operate effectively.
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