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Kenyans are paying the bill for past and present State agency workers who have not settled their salary advances and loans amounting to hundreds of millions of shillings.
Auditor-General Edward Ouko’s reports on the agencies for the past four years reveal a scheme in which the employees have burnt a Sh300 million hole in Kenyans’ pockets through salary advances and loans that are proving to be as heavy a burden as corruption.
The reports also show that the organisations are not keen on recovering the loans, keeping records on the debts or even furnishing the Auditor-General with details for scrutiny.
The loans cash cow has compounded the problems for troubled firms like Nzoia Sugar, which is among 36 State agencies that are technically insolvent and would need nearly Sh120 billion to be revived.
The Nation was able to trace Sh300 million in loans and advances in Mr Ouko’s reports.
Some loans were advanced in the 1990s. Factoring in time and inflation could push the amount close to Sh1 billion for the agencies alone.
What was intended as a good gesture and motivation for the employees in government firms has become a gravy train for some individuals.
Public policy and economy analyst Robert Shaw says the loan programme is an offshoot of corruption, which has plagued the institutions for many decades.
Mr Shaw says salary advances and loans to workers in government and State-owned firms should be done away with.
“The system is being misused and abused. The government cannot afford such losses. The State is losing a fortune and it appears not to have adequate mechanisms in place to ensure repayment,” he said.
“The employees are taking the loans knowing that they will get away with defaulting. It is a backdoor form of corruption.”
Some individuals who borrowed money have since died, closing the door on recovery.
Ms Jacqueline Munyaka, a specialist in corporate, constitutional and labour law, says that in cases where one has left employment, the State agencies should have deducted the loans from his or her final dues.
She adds that only pension is exempt from recovery and that any established breach of policies in State institutions falls under the Ethics and Anti-Corruption Commission, “which should prosecute where there is evidence”.
The Kenya Wildlife Service, for instance, has to write off Sh28 million in loans given to workers who have since died.
Mr Ouko also stumbled upon a comedy of errors that saw several employees in the State firms earn huge salaries and allowances after resigning or retiring.
The Kenya Agricultural and Research Organisation tops the list with Sh42 million in staff loans and advances. Many records on the debts are missing.
The Kenya Revenue Authority failed to include in its records Sh2.2 million in loans advanced to 29 employees between 2011 and 2016 and which are yet to be settled.
The Auditor-General’s 2016/17 report on the Export Processing Zones Authority shows that a former chief executive manipulated the system and took a Sh7.7 million salary advance. The money has not been paid.
But Mr Ouko does not name the CEO or when he was in charge of the authority.
“Someone was responsible for that. That is an EACC issue. It is a criminal offence … because these are State assets. If you can establish the collusion and fraud, then you would have cause for a case and recover the assets,” Ms Munyaka said of the EPZ issue.
Some State agencies like Simlaw Seeds have also advanced loans to workers without keeping records.
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