Auditor General flags Nairobi county's Sh20 billion financial irregularities

Nairobi's governance is under scrutiny as Auditor General Nancy Gathungu reveals financial discrepancies amounting to over Sh20 billion.

In a report presented to the Senate, Gathungu highlighted a concerning pattern of irregularities and potential mismanagement within the City Hall administration.

Governor Johnson Sakaja's leadership faced criticism as the audit revealed a failure to justify numerous expenditures, irregular procurement practices, and instances of double payments. The report, covering the period up to June 30 last year (FY 2022-2023), brought to light significant gaps in financial accountability.

Among the highlighted issues was the revelation of a flawed payroll system, where some employees were found sharing bank accounts, leading to duplicated salary and allowance payments.

“Review of the payroll for the period revealed that three employees shared one bank account,” the report says.

The county incurred losses of Sh15.42 million due to such duplications, with over Sh100 million paid out for unverifiable allowances.

Nairobi's financial woes deepen as it grapples with a staggering debt of over Sh100 billion, including outstanding legal fees and stalled projects worth Sh1.36 billion.

The report raised concerns about the feasibility of repaying debts while simultaneously addressing the needs of the public.

Critical projects like the construction and equipping of healthcare facilities such as Pumwani Lucky Summer Dispensary and Mama Lucy Kibaki Hospital Phase II were left incomplete, with funds misappropriated.

The report highlighted instances where contractors were awarded new contracts despite failing to deliver on previous projects.

“Despite the failure to complete the projects, the same contractor was awarded another contract for the construction works at Mama Lucy Kibaki Hospital Phase II at a contract sum of Sh344.10 million,” reads the report.

Furthermore, the county's automated revenue collection system, Nairobi Pay, was found to be inadequately managed, raising fears of revenue loss and data security breaches.

Gathungu emphasised the lack of documentation regarding the system's implementation and terms of service delivery.

Asset acquisition processes came under scrutiny, with irregularities amounting to over Sh566.97 million identified.

Payment vouchers for construction projects lacked necessary documentation, casting doubts on the efficiency and transparency of the spending.

Questions were also raised regarding fund transfers to the defunct Nairobi Metropolitan Services (NMS), with insufficient documentation provided to justify the transactions.

Additionally, payments totalling Sh163.69 million could not be traced, further complicating the county's financial accountability.

Irregular procurement practices added to the financial mismanagement, with millions spent on services and goods without proper documentation or adherence to procurement laws.

Double payments for security services, consultancy fees, and scholarships further highlighted the systemic flaws within the county's financial management.

The report indicates that 47 beneficiaries, received a total disbursement of Sh2.50 million from counties outside Nairobi, while an additional 25 recipients, totalling Sh1.16 million in disbursements, originated from private primary schools.

“In addition, analysis of data provided in support of disbursements indicated cases of issuance of both scholarships and ward bursaries to 683 beneficiaries totalling Sh32.03 million,” reads the report further.