AG, Treasury differ on Covid fund status
Confusion reigned yesterday as to whether the Covid-19 Emergency Response Fund (ERF) board established by the government to mobilise funds for emergency response against the spread of the pandemic was a public entity or a public fund.
While the National Treasury believes that the Fund is a public entity, the Attorney General maintained that it was a private affair.
Solicitor General Ken Ogeto said yesterday that the board that was appointed by President Uhuru Kenyatta was not envisaged by the Public Finance Management (PFM) regulations.
“We have been advised that the appointment of the members of the board was not intended to, and was consequently never effected as per the provisions of legal notice No 38 of 2020,” Ogeto said when he appeared before the Public Accounts Committee (PAC).
The statement differed from that made by the National Treasury Principal Secretary Dr Julius Muia, who told the committee that the board was created under the attendant PFM regulations as enacted by Parliament.
Auditor-General Nancy Gathungu in her report on the utilisation of the Covid-19 funds, has indicted the fund board for registering a private company.
Another issue of concern that has emerged in the probe is whether the Sh2.6 billion so far collected by the board is public money or private.
The Kenya Covid-19 Emergency Fund Limited, which is chaired by Jane Karuku, was registered under the Companies Act as a company limited by guarantee and had the mandate to manage the funds raised by the board.
In her report, the auditor maintains that the fund is a private entity duly established under the Public Finance Management (COVID-19 Emergency Response Fund) Regulations, 2020.
However, the committee is yet to get to the depth of whether the monies collected by the fund was misappropriated by the board.
The conflicting positions over whether the fund is a public or private entity is heightened by the fact that it received Sh338.49 million from the government which means it received cash from the public coffers.
Ogeto told the committee that the fact the National Treasury was not the administrator of the fund is a clear indication that the fund is not public.
“This, therefore, means that the money raised and held by the board “cannot be deemed to have been collected by a national government entity or under statutory authority,” the Solicitor-General noted.
According to the Solicitor General, the emerging situation is that there was an intention to create two funds and whereas the National Treasury erred in law by not creating the public fund, gave way for the private fund.
Relevant laws
Members, however, differed with Ogeto with committee chairperson Opiyo Wandayi accusing him of confusing the members. “Now that you are saying that the National Treasury erred in law, what is the possible way out of this? Could you kindly cite the relevant laws that the National Treasury violated?” posed Wandayi.
Aden Duale (Garissa Township), wondered why the AG allowed the auditor to inspect the Fund if indeed it was a private entity.
“All the PFM regulations related to Covid-19 that we have passed in this House provide that all Covid funds shall be managed by the National Treasury,” Duale noted.
Ogeto told the watchdog committee that regulation 7 of the legal notice he has cited, required President Uhuru to appoint the Chairperson and secretary to the board “with the duties specified in the instrument of appointment”.
“We have not been provided with any evidence of such appointment by the President or his delegate to arrive at the conclusion that the board was set up pursuant to legal notice No 38 of 2020,” said Ogeto.
