In Summary
  • CS Yatani has exposed the fact the Kenya is running a Sh3 trillion budget on empty coffers.
  • The current budget, and previous ones were shambolic, riddled with cooking books and hiding billions of shillings that were secretly plugged with additional debt.
  • According to sources, the men who have run Kenya into an economic storm are hand-picked and sneaked into Treasury building through a backdoor of KRA. PSC has little say over appointments.

The last thing former Cabinet Secretary Henry Rotich and Dr Kamau Thugge did before being hounded out of office was pay themselves Sh3.7 million each as allowances for preparing the 2019 budget.

It turns out the current budget, and previous ones were shambolic, riddled with cooking books and hiding billions of shillings that were secretly plugged with additional debt.

The Nation has uncovered patronage practised by the Rotich-Thugge leadership that propagated a cultish silence at Treasury even while the Constitution was being disregarded and debt, and GDP figures altered.

CLOSED CLUB

According to sources who spoke on condition of anonymity, Treasury has been a closed club where the Public Service Commission has little say. Instead, the men who have run Kenya into an economic storm are hand-picked and sneaked into Treasury building through a backdoor of Kenya Revenue Authority.

“This is an issue that has been raised by the Kenya National Audit Office since 2013, but the management has been going slow on it. It is something that is being worked on to get Treasury to advertise for the top posts,” a senior source with direct knowledge of Treasury workings, but who is not authorised to speak to the press, told Smart Company.

Another senior official, who also talked to this paper, said that only one director-general Public Debt Management Office, where Haron Sirima sits, had been hired competitively with the rest serving in crucial posts on contracts.

“You can’t give people one year renewable contracts and expect them to have a long-term view; they will just work with ministries that give them kickbacks because their thinking is short-term,” a source said.

FODDER FOR ONLINE JOKES

As the country stares at the face of debt distress and extremely vulnerable to any shock from drought to inflation, economic policy that seems to contradict is not helping the President with some suggesting Uhuru Kenyatta appoints an economic council to advise him akin to the Kibaki days.

While amiable on camera, mixing freely with people and churning fodder for online jokes and memes, Mr Kenyatta is feared by his men.

At an August morning meeting, a dejected team of Treasury officials made their way to State House; their bosses had been fired and locked up, and Labour CS Ukur Yatani and Dr Julius Muia named in acting capacity.

SHOCKING TRUTH

The Treasury mandarins had given the new CS the reality, the truth, Kenya’s debt had surpassed the 50 percent GDP in December 2016, the budget had a Sh100 billion hole that could not be funded, the numbers had been fiddled so much that the debt figures appearing in the budget had written out over Sh70 billion.

“The CS is bold. He told the President the truth, and he was shocked. The President asked the CS to redo the budget, and ostracised the team, saying, if this is the team that helped the other leadership cover up, then he had no confidence in them,” a source privy to the August meeting told Smart Company.

CS Yatani has opened a can of worms that has exposed the National Treasury for what it really is; his frank admission to Parliament, journalists and the nation at large has exposed the fact the Kenya is running a Sh3 trillion budget on empty coffers.

Yatani said the government expected revenue shortfalls following underperformance of Sh123.5 billion last year and last minute adjustments to Finance Bill, 2019, in August.

However, instead of cutting spending, Treasury moved the money around to productive sectors rather than make budget cuts as President Kenyatta had suggested in August.

ORCHESTRATED FLAWS

“Expenditure projections for fiscal 2019/20 have been revised to accommodate the weak revenue performance through trade-offs and reallocations of the existing budgetary provisions and additional expenditure on productive areas of spending across the government,” Yatani said.

In fact, the team drew up a supplementary budget that sought to increase spending by 2.8 per cent to Sh3.13 trillion in its 2019/20 budget, as seen in parliamentary documents tabled last week.

The ministry blew spending by Sh85.5 billion for developmental projects and an additional Sh6.5 billion for counties in a budget review that will only reduce recurrent expenditure by Sh5.6 billion.

The President was right; the team of Treasury mandarins had lost confidence, there was little they could change having created the budget in the first place and addicted to debt-funded expensive budgets.

Sources indicate that each member of the team has had his fair share of blame. Take Bernard Ndungu for instance, the current position of Director General Accounting Services & Quality Assurance, who is said to have led to the accumulation of short-term Treasury bills to keep the government running.

“Ndungu has kept the pressure to borrow at all costs, saying, he needed money to pay counties, keep things running, now we have Treasury bills of up to Sh900 billion and we went for a further almost Sh70 billion,” the source said.

BACKDOOR APPOINTMENTS

Despite holding the senior position, Ndungu was never competitively appointed. He joined Treasury in 2013 as the accountant-general.

Sources say the former director at PwC was sneaked in through KRA where his tenure is renewed yearly for a position that should be held for a three-year term. He is currently seeking a renewal.

To push the impunity, Ndungu was appointed to the board of KRA on behalf of Treasury, the same organisation that practically pays him.

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