Counties drain Sh15 billion in legal fees as key services suffer

An audit report for the year ending June 2024 has uncovered how over 20 counties spent more than Sh15 billion on legal fees, travel and allowances, even as key public services remained underfunded and poorly delivered.

Auditor General Nancy Gathungu noted that the widespread spending was marked by irregular payments, unsupported claims and failure to apply sanctions on those mismanaging public funds.

This has led to wastage, incomplete projects, ballooning pending bills, and a rising threat to service delivery and economic stability.

“Despite numerous reports indicating a lack of accountability and inadequate documents to support the legality and effectiveness in the use of public resources, failure to apply the requisite sanctions has resulted in some accounting officers not adequately accounting for public resources,” the audit reads.

Nairobi County was found to have the highest legal bill, owing Sh6.2 billion to just four advocates, a figure that makes up 29 per cent of its Sh21.4 billion in pending bills.

Many of the cases stemmed from cancelled contracts, unpaid supplies, employment disputes, and flawed procurement practices.

“The judgments entered against the County Executive resulted in a high cost of litigation and interests,” the report adds.

The audit warns that Nairobi's 1,086 active legal cases could result in even more liabilities, affecting the county’s ability to meet its obligations. Despite having 350 prequalified lawyers, only eight were assigned 65 cases.

“Management did not explain the criteria used to allocate multiple cases to the eight advocates,” the report states.

The county also made duplicate supplier payments worth Sh140 million and had major payroll irregularities.

In April, May and June 2024, thousands of employees appeared to share bank account details and agent codes, with 7,777, 6,123 and 6,803 officers respectively flagged.

The payroll further revealed 74 employees with identical names, six listed without any salary, and a total of Sh5.3 million in overpayments.

Some staff were paid salaries higher than allowed for their job groups, causing an overpayment of Sh8.4 million, while Sh148.6 million was paid out without any tax deductions.

Mombasa County was cited for Sh67.5 million in legal fees for unresolved cases against the executive.

The Auditor linked the rising costs to the failure by the county to honour court decisions. In one case, a vehicle supplier’s unpaid Sh8 million escalated to Sh68.6 million in costs and interest.

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In another, a 2006 contractor claim of Sh854,926 has grown to Sh1.2 million due to delayed payment for drainage works.

“The expenditures could have been avoided if the County had honoured the claims after the court rulings. In the circumstances, the value for money on the expenditure could not be confirmed,” the audit stated.

In addition, Mombasa spent Sh17 million on domestic travel and allowances, with the economic planning department using Sh10.6 million, the Public Service Board Sh4.1 million, and the education and finance departments spending Sh2.2 million.

Kilifi spent Sh71.6 million on six private lawyers for litigation and consultancy, while Nakuru paid Sh22.6 million in legal fees without supporting documentation.

Tana River paid Sh30.7 million to four law firms, and Mandera spent Sh45.5 million on legal services.

Kiambu County’s liabilities from court cases stood at Sh517.3 million. The county also made questionable domestic travel and subsistence payments totalling Sh96.1 million, and irregular payments of Sh24 million that lacked audit verification.

In Kisumu, legal fees amounted to Sh46 million, while Murang’a was flagged for unsupported hospitality and supplies costs of Sh631,884, imprest issues of Sh2.7 million and project irregularities valued at Sh543.4 million.

Kirinyaga was flagged over irregular payments to revenue staff amounting to Sh4.3 million for breakfast, working on weekends, overtime, and taxi use.

The Auditor pointed out that these payments had no guiding policy and were applied without consistency.

The Auditor General warned that the continued misuse of funds and weak enforcement of accountability rules were eroding public trust and holding back development at the county level.