This archive report was first published on 2 July 2019.
Auditor General Exposes Sh823.7 Billion State Corporations Scandal ¶
On July 2, 2019, Auditor General Edward Ouko unveiled a shocking revelation of a Sh823.7 billion scandal involving state corporations, with 72 institutions owing the government billions of shillings in outstanding loans.
According to Ouko's report, the government risks losing Sh823.7 billion worth of outstanding loans advanced to 72 state corporations, with Sh47.52 billion of these loans being dormant and having fallen due on various dates over the years.
Most of the loans were issued out by the National Treasury without the required procedure and documentation, making it difficult to determine whether public funds had been used properly.
Failure to redeem the loans precipitates a high likelihood of defaulting and eventual loss of public funds because of continued write-offs of bad debts, Ouko's report warned.
The National Assembly's Public Accounts Committee (PAC) chaired by Ugunja MP Opiyo Wandayi is set to review Auditor General's report and table their recommendations to the House.
Some of the notorious parastatals with dormant loans in billions of shillings include Rural Electrification Authority (Sh13.65 million), Coast Water Service Board (Sh7 million), Northern Water Services Board (Sh5.39 million), and Tanathi Water Services Board (Sh4.4 million).
Other institutions with outstanding loans include Lake Victoria South Water Services Board (Sh3 million), Lake Victoria North Water Services Board (Sh2.8 million), Mumias Sugar Company (Sh2.5 billion), and Kenya Meat Commission (Sh300 million).
These agencies' managements do not pay the loans intentionally so that the government ends up writing off their debts, Ouko's report alleged.
