In Summary
  • The payment of more than Sh9 billion since 2016 was authorised and executed in favour of entities which did not supply anything.

  • Investigators have narrowed down on 36 companies which claimed to have supplied NYS with various goods, among them Firstling Supplies, which has already been paid Sh1.3 billion.

  • Public Service and Youth Cabinet Secretary, Prof Margaret Kobia, told the Nation on Sunday that whoever is found culpable will be held to account.

Corrupt National Youth Service officials set up dummy companies, forged tender documents and exploited vulnerabilities in public finance computers — popularly known as IFMIS — to pull off one of the most audacious frauds in recent times, according to investigators and officials who spoke to the Nation on Sunday.

In an extensive conspiracy believed to involve senior government figures, the payment of more than Sh9 billion since 2016 was authorised and executed in favour of entities which did not supply anything.

This is the biggest incident of payment for “air” to come to light since the Anglo Leasing scandals of 2005, while the NYS has become a byword for the basest graft since its budget was bumped up from a mere Sh2.5 billion to Sh25 billion in the 2014/15 financial year.

Investigators have narrowed down on 36 companies which claimed to have supplied NYS with various goods, among them Firstling Supplies, which has already been paid Sh1.3 billion.

AWARD TENDERS

Also being investigated are Calabash Investments, Annwaw Investments, Arkroad Holdings Ltd, Kunjiwa Enterprises, Ameratrade Enterprises, Ngiwako Enterprises, Jerrycathy Enterprises, and Ersatz Enterprises.

While the Nation is not alleging wrongdoing on the part of these entities, the Directorate of Criminal Investigations has been digging into whether the law was followed in the award of tenders to them at NYS, and whether they supplied any goods against which they have been paid — collectively — billions of shillings in public money.

Public Service and Youth Cabinet Secretary, Prof Margaret Kobia, told the Nation on Sunday that whoever is found culpable will be held to account.

“The National Youth Service is busy implementing huge and important government projects and emergency disaster management, and anything that touches on its staff is of big concern to all Kenyans who are keen to know the truth,” she said.

CORRUPTION

“We do not condone any form of corruption and the President has made it very clear that anyone found engaging in this vice will have his job terminated. We will allow the relevant agencies to get to the root of this matter and come up with findings which will inform our next course of action.”

The revelations are a blow to the solar plexus of the government, which has sworn to fight corruption amid mounting scandals and failure to prosecute and punish corrupt officials as well as claim back stolen assets.

According to investigators’ understanding of what transpired, corrupt officials created companies then assigned them contract numbers ordinarily given to contractors pre-qualified by the Department of Public Works.

Whereas the contract numbers were valid and pre-qualified companies genuine, the dummy companies were basically shells created to facilitate fraud. Using a valid contract number, an account could be opened for the shell companies in the Integrated Financial Management Information System (IFMIS). Local Purchase Orders (LPOs) were then raised in respect of the dummy companies and the impression created that they had supplied goods to NYS. The fake payments were slotted into the NYS stock of pending bills.

TRANSPORT BRANCH

Interestingly, these suppliers claim to have been contracted to supply goods to NYS’ Mechanical and Transport Branch — which is charged with procuring and operating machinery, spare parts and other mechanical wares — yet the companies were paid for supplies such as food and tents, which are supposed to be procured by other departments within the institution.

Investigators’ focus is also trained on the decisions taken by the Permanent Secretary for Youth Affairs, Ms Lilian Mbogo-Omollo, who took over the NYS docket as accounting officer after it was transferred from Ministry of Devolution to Public Service, Youth and Gender in 2015. At the time, Ms Sicily Kariuki was appointed Cabinet Secretary. Also under the spotlight are Mr Richard Ndubai, the Director-General of NYS who replaced Dr Nelson Githinji, NYS Director of Finance Wellington Lubila, and Head of Supply Simon Kanyi.

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