Kshs 1.8B Left to Rot? MPs Alarmed by Idle Funds at Foreign Missions
The issue, raised during a Public Accounts Committee (PAC) session, centred on funds held in Kenya’s embassies in Washington, Addis Ababa, and London.
The committee, which scrutinised the audited financial statements of the State Department for Foreign Affairs for the year ending June 2023, flagged the matter as a serious accountability lapse.
In her audit report, Auditor-General Nancy Gathungu questioned the handling of Kshs 1.8 billion recorded as development cash book balances in missions abroad.
She noted that the funds had accumulated over several years due to the failure to surrender unutilized allocations at the close of each financial year.
However, appearing before the committee chaired by Butere MP Hon. Tindi Mwale Principal Secretary State Department for Foreign Affairs Dr. Abraham Korir Singoei defended the more than KSh1 billion unutilized development funds saying the money represents development cash flow balances held across various missions and not idle funds.
Dr. Sing’oei said the figure of KSh1.8 billion had been set aside for specific purposes tied to ongoing projects and mission operations abroad.
“In Washington, D.C., the balance comprises contractors’ retention monies for works already completed and certified, pending the conclusion of the defects liability period before final handover of the project,” he explained.
“It also includes allocations for ongoing refurbishment works. These funds will be transferred to deposit accounts and released directly, hence no need to factor them into the current budget.”
Turning to the London mission, the PS said the monies were earmarked for the purchase of a Chancery property.
He noted that while the property had been identified and the procurement process finalized, the funds could not be spent because the Attorney General had not yet given concurrence for the procurement of a conveyancing lawyer to prepare the necessary documentation.
“Since the process was already at an advanced stage, the funds were retained and transferred to the mission’s deposit account, awaiting final execution of the sale agreement,” Dr. Sing’oei told MPs.
He further revealed that part of the London balance was generated locally through consular services and retained to supplement Exchequer funding for operating costs.
These funds were later regularized under Supplementary Estimate No. 2 of FY 2023/24, allowing the mission to utilize them lawfully.
Dr. Sing’oei acknowledged that some missions had failed to transfer their development fund balances into deposit accounts by the close of the financial year but assured the committee that instructions had since been issued to enforce compliance.
“Going forward, such balances will be placed into deposit accounts, from where payments will be effected for completed works, certified and billed, or for property acquisitions, as in the London case,” he said.
The PS emphasized that the funds were secure and aligned to development priorities, dismissing concerns of mismanagement or budgetary irregularities.
However, legislators accused the Ministry of Foreign Affairs of failing to account for the funds, sparking concerns over financial discipline and the fate of critical diplomatic projects.
“What is the difficulty in apportioning this figure across the three items? As a committee, how do we establish, for instance, how much of the KSh1 billion is tied to Washington and Addis Ababa, how much relates to London development, and how much is attributable to London revenue? Posed Bura MP Yaqub Adow.
Aldai MP Hon. Marianne Kitany has raised questions over the procurement of the London Chancery property, urging the Ministry of Foreign Affairs to provide documentary evidence to back its explanations.
Kitany asked Principal Secretary Dr. Abraham Korir Sing’oei to attach evidence showing when the contract was signed, its terms, and when it ended.
“The PS mentioned that the funds were for the purchase of the Chancery, and that the procurement was finalized without the involvement of an advocate or lawyer,” she said.
“He further explained that the monies are being held pending concurrence for the procurement of a conveyancing lawyer. This raises questions: does it mean the procurement was undertaken without legal representation in the first place?”
The legislator pressed further, questioning whether the Attorney General had initially handled the process, and why the ministry was now seeking concurrence from a separate conveyancing lawyer.
“This information remains unclear,” Kitany stressed. “The committee requires clarity from start to finish on who was responsible for the conveyancing at the outset and why a different lawyer is now being sought.
Rarieda MP and senior counsel Hon. Otiende Amollo expressed concern over prolonged delays in the purchase of Kenya’s Chancery property in London, despite funds having been allocated years ago.
Amollo reminded officials from the Ministry of Foreign Affairs that it was the committee itself that first flagged the matter after discovering the London mission was operating on an expired lease.
“We recommended that the property be purchased. The sequence of events is clear: first, the identification of the need, which the committee agreed with; second, the request for funds, which were provided; and third, the procurement, which was completed,” he said.
The legislator explained that while no legal input was required during procurement, conveyancing because it involves a foreign jurisdiction must be handled by a local practitioner in the UK.
“If it were in Kenya, the process could easily have been handled internally. But in a foreign country, the services of a conveyancing lawyer are necessary,” he added.
Amollo questioned why, despite KSh1.669 billion having been allocated for the London development in the 2022/2023 financial year, the funds remain idle.
“Everything else has been completed, yet we are told the delay is due to a pending letter from the Attorney General,” he said.
The MP pressed the Ministry to produce evidence of requests made to the AG, warning that the committee could not accept a situation where money is left unused for three or four years over what he termed “one of the simplest and least costly undertakings.
Dr. Sing’oei explained that under Regulation 56 of the Public Finance Management Regulations, an accounting officer is empowered to retain resources for multi-year contracts without necessarily returning the funds to the National Treasury.
He insisted that this is why some of the monies are still being held in various accounts.
“We are permitted to hold deposits beyond a financial year. As I had earlier informed this committee, Regulation 56 of the Public Finance Management Regulations allows us to do so in respect of development projects that are multi-year in nature. This provision applies where the resources budgeted by the National Treasury cannot be fully utilized within a single financial year,” he said.
The PS however said the challenge in this particular case relates to the property, the ministry chose to acquire namely, the current Chancery that Kenya has occupied since independence.
“The cost of this property is far beyond what the National Treasury was able to allocate. In fact, during the last financial year, while Treasury initially allocated some funds for the Ministry of Foreign Affairs under the development budget, it subsequently withdrew the allocation. As a result, we were left without resources to proceed with the acquisition,” he observed.
Otiende pressed the PS expressing frustration that a relatively simple legal step had taken years.
“I want to know whether we should place blame on the Attorney General or not. From your initial response, it appears the AG is responsible, but from your additional remarks, it now seems we cannot blame the AG, since you are still holding KSh400 million. Could you please clarify this point so that we are clear? He posed.
Dr. Sing’oei dismissed claims that delays in acquiring Kenya’s Chancery property in London were caused by the Attorney General’s office, saying the matter now rests with the National Treasury.
He explained that there had been two separate attempts to purchase the property.
The first, initiated during the tail end of the previous administration, collapsed after the necessary consent from the Attorney General was not secured, leading to delays and the eventual lapse of the offer.
“With the new administration, we initiated a fresh procurement process,” he said.
“In fact, the initial price agreed upon under the former administration was significantly higher than what we have since been able to negotiate. We are prepared to provide evidence in that regard.”
Dr. Sing’oei stressed that the Attorney General had since granted all the necessary approvals, including authorization for the procurement of a solicitor to finalize conveyancing.
“As such, the issue of delay on the part of the Attorney General is no longer in question,” he told MPs.
“What remains at this stage is the disbursement by the National Treasury of the outstanding Kshs 400 million required to close the transaction.”
The PS assured the committee that once Treasury releases the funds, the long-awaited purchase of the London Chancery will be concluded.
PAC further pressed the ministry to break down the KSh1.885 billion across the missions, accusing officials of offering blanket explanations without clear apportionment.
The ministry admitted that only about KSh215 million related to Washington and Addis Ababa, with the bulk linked to the London deal.
The committee resolved that the ministry must furnish Parliament with a comprehensive and updated report on the London property purchase and other mission expenditures.
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