Commerce

Auditor turns spotlight on Posta over Sh1.8b employees, KRA dues

Monday, April 25th, 2022 10:41 | By
Auditor-General Nancy Gathungu. PHOTO/Courtesy

 The financially-troubled Postal Corporation of Kenya (PCK) has failed to honour its taxes and retirement benefits obligations despite disposing of property to raise funds. A report by Auditor General Nancy Gathungu revealed that the cash-strapped parastatal has failed to remit employee and taxman dues amounting to Sh1.8 billion.

The report submitted to Parliament shows that Posta is struggling to honour payroll taxes and retirement benefits further underlining the deepening cash flow crisis.

The State agency’s revenue have taken a hit from the effects of Internet-based mailing systems and the entry of private couriers prompting the agency to dispose-off some of its assets.

Staff loans

From the report, trade and other payables balance included pensions and gratuities deductions amounting to Sh1.32 billion that had not been remitted to the staff pension scheme. “Another Sh108.5 million due to Cooperatives and Sh305.6 million being staff bank loans deductions were not remitted,” the report reads in part.

In February, Parliament summoned Postmaster-General Dan Kagwe over the non-remittance of Sh168 million that was collected on behalf of the Business Registration Service (BRS).

National Assembly’s Public Accounts Committee (PAC) sought an explanation from Kagwe on the whereabouts of 168.8 million indicated as held by Huduma Centre.

It is not the first time Auditor-General Nancy Gathungu has questioned the failure to remit the money to the Treasury.

“This is contrary to Section 19 (4) of Employment Act, 2007 which requires an employer who deducts an amount from an employee’s remuneration to pay the amount so deducted in accordance with the time period and other requirements specified in the law,” Gathungu noted. Remittance of statutory, loan and members’ deductions to Saccos and banks are mandatory employer obligations.

The Auditor General’s report submitted to lawmakers pointed out that payables due included Sh585.1 million being statutory deductions, Value Added Tax withheld, customs and excise taxes and other taxes not remitted to Kenya Revenue Authority contrary to the rules made under Section 130 of the Income Tax Act.

In the report, the Auditor -General said Posta is technically insolvent even as she flagged financial rot running into hundreds of millions of shilling in the agency. 

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