Government diverted Sh2.3 billion meant for AU subscriptions - Audit report
No documentation was provided to support the approval of the transfer to the exchequer, raising concerns over the accuracy and legitimacy of the payment.
The government irregularly transferred Sh2.3 billion from a dedicated fund meant for paying subscription fees to the African Union (AU) and other international organisations, violating financial regulations that restrict its use to that specific purpose.
According to Auditor General Nancy Gathungu's report for the financial year ending June 2024, no documentation was provided to support the approval of the transfer to the exchequer, raising concerns over the accuracy and legitimacy of the payment.
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"The statement of receipts and payments reflects a surplus transfer to the Exchequer of Sh2.3 billion as disclosed in Note 10 to the financial statement. However, documentation to support approval of the payment was not provided for audit," Gathungu said in the report.
The Auditor General noted that the transaction contravened the Public Finance Management (PFM) regulations ratified in 2017, which explicitly state that all funds from the African Union and Other International Organisations Subscription Fund must be used exclusively for remitting Kenya's subscriptions.
"Regulation six requires all receipts, savings, balance, and accruals of the Fund at the close of each financial year to be retained for the purpose for which the Fund is established," Gathungu said.
The African Union and Other International Organisations Subscription Fund was set up in 2017, replacing the previous system where individual ministries, departments, and agencies (MDAs) directly allocated subscription fees through their annual budgets.
No new laws
Despite the transition to this centralised model, Gathungu highlighted that the government has not repealed previous laws that mandated MDAs to remit funds separately, creating a risk of duplicate payments to international organisations.
Kenya is a member of several regional and international bodies, including the Common Market for Eastern and Southern Africa (COMESA), the AU, the Intergovernmental Authority on Development (IGAD), and the East African Community (EAC), all of which require annual subscription payments.
The country also serves as a key regional hub for United Nations agencies, multilateral organisations, and diplomatic missions.
According to a report tabled in Parliament in January, Kenya's payments to international and regional organisations surged to Sh7.75 billion in the financial year leading to June 2024.
This marked an increase from the previous year's Sh4.9 billion, as the country continues to maintain its membership in a range of global and regional bodies.
The African Union (AU) and the East African Community (EAC) Secretariat received the largest shares of the payout. The African Union Commission (AUC), where Kenya has nominated former Prime Minister Raila Odinga to be the next chairperson, received Sh1.22 billion in subscription fees. Meanwhile, the EAC secretariat received Sh1.26 billion.
The report titled "Progress Made in Fulfilling the International Obligations of the Republic of Kenya" also revealed that the Intergovernmental Authority on Development (IGAD) received Sh539 million, and the Global Fund was allocated Sh289 million.
Other international bodies such as the United Nations General Fund, the International Fund for Agriculture, and the Regional Scholarship and Innovation Fund also benefitted from Kenya's contributions.
To fund these payments, the government allocated Sh834 million to the Principal Secretary for Foreign and Diaspora Affairs, responsible for managing international subscriptions through Kenyan missions abroad. Other significant allocations included Sh224.7 million to the Northern Corridor Transport Network, Sh240 million to the UN General Fund, and Sh130.8 million to the International Fund for Agriculture.
All payments are centralised through the National Treasury, with ministries submitting invoices for international obligations.
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