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Sh3.4b lost in false Standard Gauge Railway land claims

By Zadock Angira
Thursday, September 10th, 2020
SGR train at Mombasa terminus. Photo/Courtesy
In summary
    • Inquiry: The Auditor General had been asked to tell whether the acquisition of the parcel were necessary and for a public purpose as required by law.
    • Lawful: Parliament also wanted  AG to confirm that the parcels were lawfully acquired.

The taxpayer could have lost Sh3.4 billion after the National Land Commission (NLC) paid the monies to landowners without establishing the true value of the parcels, a special audit report by the Office of the Auditor General has revealed.

According to the report, NLC paid out the billions without establishing important details relating to the parcels of land such as their actual acreage, plot number and valuation reports.

Payments, according to the Office of the Auditor General, were made between 2014 and 2016.

Report further states that, NLC accounts for the 2014/2015 and 2016/2017 Financial Years, the  commission spent Sh2,868,539,469 on land purchase during the 2015/2016 Financial Year.

Of the total amount, Sh2,079,764,002 was for compensation payments whose details of acreage and plot numbers were not availed for audit verification.

Commission also spent Sh535,275,993 on goods and services, which was also queried.

However, there was no evidence that NLC availed approval of the National Treasury for audit verification.

“NLC availed a schedule that did not disclose acreage, plot numbers acquired and were not supported by valuation reports,” the AOG noted.

Special audit identified various irregularities and weaknesses that raised doubt on the lawfulness, transparency and accountability of the land acquisition process.

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Audit was conducted following a request by the National Assembly’s Public Accounts Committee to determine whether payments made by the NLC on behalf of the government were used in a prudent and responsible way.

Auditor General, however,  said in the subsequent Financial Year 2016/2017, the commission’s financial statements presented fairly, in all material   respects, the financial position  as at June 30, 2017. 

  International Public Sector Accounting Standards and comply  with NLC Act, 2012 of the Laws of Kenya. 

“In this regard, the financial statements were unqualified,” the OAG said.

NLC also earned Sh226,245,345 in form of interest on monthly cash balances held in its National Bank of Kenya (NBK). 

These funds were, however, irregularly used to fund NLC operations without approval of the National Treasury.

The Auditor General has now recommended that the land commission consults the Treasury on the way forward on irregular utilisation of interest earned on monthly cash balances and that the commission’s management maintains a database or register for all public land acquired

It was also recommended that NLC ensures that before effecting payments, there exists reliable valuation compensation schedules   that are dated and signed. 

The audit established that the budgeting and financing for acquisition of land on behalf of the government entities is not budgeted under the NLC Vote 2021 but instead under respective public entities after which compensation funds are sent to NLC to effect compensations.

The NLC received Sh23.1 billion from various acquiring institutions for acquisition of land for various public projects. 

Out of this amounts, the special audit reviewed expenditures amounting to Sh14.28 billion and established some irregularities and weaknesses in managing these compensations that could be a barrier to realisation of value for money.

These included unreliable valuation reports, failure to conduct adequate due diligence prior to effecting compensations, and inadequate record keeping.

Another irregularity noted was that public funds were committed to land that was not put into immediate use.

 “Adequate   controls should be put in place in both Finance and Valuation Departments to ensure  appropriate   segregation  of duties  to enhance  compliance  with  this requirement,” the report indicated.

The OAG has also recommended that further investigations by the Directorate of Criminal Investigations (DCI) and the Ethics and Anti-Corruption Commission (EACC) be conducted to establish criminality on payments made to beneficiaries along Embakasi station railway Reserve whose titles had been revoked by the NLC Committee on Review of Grants and Dispositions.

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