Kenya Ports Authority in a spot as audit reveals financial irregularities

The Kenya Ports Authority (KPA) is in a spot following an audit that revealed serious financial irregularities.

Auditor General Nancy Gathungu has highlighted issues such as improper payments for overtime, subsistence, and consultancy fees, raising concerns about financial management within the organisation.

Among the key findings, the report notes that KPA paid Sh49 million in overtime allowances to employees in training grades.

However, the KPA Human Resource Manual, established in 2017, clearly states that employees in training are not eligible for overtime payment.

"In the circumstances, the management was in breach of the authority's policies," Gathungu remarked.

The audit also raises questions about benefits amounting to Sh9 million paid to former managing director John Mwangemi.

Acting since July 1, 2021, he received acting allowances totalling Sh17.2 million as of March 31, 2023.

Gathungu stated that there was insufficient evidence to confirm if Mwangemi met the qualifications required for the role, as supporting documents were not provided for verification.

"No explanation was provided why the officer, appointed in an acting capacity, was eligible for gratuity amounting to Sh5.3 million," she stated.

The auditor general criticised the basic salary of Sh820,000 paid to Mwangemi, which exceeds the KPA scale for his grade, HE1, where salaries range from Sh306,280 to Sh445,840.

The auditor general emphasised that the remuneration details were neither shared with the authority's board nor was the position advertised.

"In the circumstances, the regularity of the amount of Sh9 million paid on remuneration benefits to the former acting managing director could not be confirmed," Gathungu added.

The report further identifies dubious expenditures, including Sh12.9 million for subsistence expenses, lacking proper documentation for verification.

"There was no supporting documentation indicating details such as who was issued with the allowance, purpose, period, and results of the exercise," Gathungu stated.

Moreover, Sh25 million paid to two service providers for advertising consultancy services was deemed unjustified, while Sh11 million spent on trips for corporate social responsibility (CSR) activities lacked adequate proof of the initiatives undertaken.

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The auditor general also flagged Sh26 million in consultancy expenditures, noting that the contract was awarded to a firm that could not fulfil its obligations.

The international consultant, hired to conduct a forensic audit of KPA's land and properties, had not demonstrated the necessary capability for the task.

The audit questioned Sh1.6 million in fuel expenses, particularly Sh1.5 million for fuelling vehicles not listed in the authority's asset register.

There were instances of multiple fuelling on specific dates without adequate justification. KPA failed to provide work tickets to confirm fuel consumption and did not explain discrepancies in their fuelling management system.

Concerns were also raised about Sh2 million spent on hiring a conference facility, where the invoice was issued a year before the event, with no satisfactory explanation provided.

Furthermore, the reported sale of port passes totalling Sh111 million is in doubt, as a disabled system created loopholes in the payment validation process.

KPA was also noted for failing to collect Sh8 million in fees for 84 jetties along the coastline, compounding the financial oversight issues within the authority.