Auditor-General tasked with investigating Moi University's Sh8 billion debt

The National Assembly's Public Investment Committee on Education has directed Auditor-General Nancy Gathungu to carry out a forensic audit of Moi University's financial situation, following its closure last week due to ongoing financial struggles.

Appearing before the committee, Education Cabinet Secretary Julius Ogamba confirmed that the institution was grappling with significant financial issues, including certified outstanding debts of Sh8 billion.

“The university was closed last week after a month-long strike by staff and lecturers due to non-payment of salaries, non-implementation of the 2013 Collective Bargaining Agreement (CBA), and failure to remit statutory deductions for loans, welfare contributions, and pension payments,” Ogamba said.

The committee, chaired by Bumula MP Jack Wamboka, instructed Gathungu to review the university's financial dealings over the past five years and submit a report within 60 days.

“I direct that the Auditor-General conducts a holistic forensic audit on Moi University covering the last five financial years and table its findings in 60 days,” Wamboka said.

He further announced that all new projects at Moi University would be suspended, and the institution would be prohibited from hiring any new staff until the audit is completed.

The inquiry follows the revelation that Moi University had failed to remit Sh4 billion in payroll deductions, defaulted on a Sh3 billion loan owed to Rivatex East Africa Limited, and accumulated Sh1.1 billion in unpaid bills as of June 2020.

The committee also urged the Public Service Commission (PSC) to assume responsibilities currently handled by PKF Consulting LLP, a firm hired by Moi University to manage downsizing efforts.

Wamboka said PSC could take over PKF's role and directed the commission to present an updated report on staff members serving in acting capacities.

Moi University's financial mismanagement was scrutinised during the meeting, attended by Vice-Chancellor Professor Henry Kosgey, former Vice-Chancellors Professor Laban Ayiro and Professor Richard Mibey, and Council Chairman Humphrey Kimani.

Ogamba supported the committee's call for a forensic audit, stating that such a thorough investigation would enable the government to rescue the university from sinking deeper into debt.

He emphasised that the audit should be extensive, covering the institution's deep-rooted financial troubles, which are also affecting other public universities like the Technical University of Kenya (TUK) and Taita Taveta University.

“The forensic audit should be as comprehensive as possible to find out what happened and what we can do to bring Moi University out of the doldrums,” Ogamba said, adding that the university’s Sh8 billion debt needs to be addressed urgently to make bold decisions for recovery.

The University Council Chairman Kimani disclosed that the institution currently owes Sh4 billion in unremitted pension. He revealed that Moi University received only Sh97 million from the government for capitation, despite a monthly wage bill of Sh403 million.

"The issues raised here are serious. We never used to have problems with pension remittances. However, the situation worsened after the government halted the parallel programme, which used to bring in Sh4 billion annually," Kimani said.

During the session, Treasury Cabinet Secretary John Mbadi was ordered to release Moi University's capitation immediately and report back to the committee on Tuesday regarding compliance.

Principal Secretary for Higher Education Beatrice Inyangala said the university had presented a revenue projection of Sh5.1 billion, but actual expenditures stood at Sh7 billion.

"We have requested an additional Sh1.5 billion from the Treasury, but even then, Moi will still face a Sh400 million deficit. We’ve asked the university to find a way to cover this shortfall," Inyangala said.