Kidero team to face fresh probe over Sh7.8 billion payouts
A fresh investigation has been opened against former Nairobi Governor Evans Kidero and nine officials in his administration over suspected embezzlement of Sh7.8 billion.
This is after a State agency raised the red flag over huge withdrawals from several county collection accounts operated in one bank between April 2014 and August 2017.
The Financial Reporting Centre (FRC), wrote to the Directorate of Criminal Investigations (DCI) and copied the Ethics and Anti-Corruption Commission (EACC) to investigate Dr Kidero, nine county officials, directors of four pharmaceutical companies and bank officials.
The officials are suspected to have moved a total of Sh7,761,474,162.38 in large withdrawals. Money was debited from the accounts mainly through structured cash withdrawals.
This mode of withdrawals raised suspicions of an attempt to break up financial transactions to get around the banking reporting requirements for transactions over a certain amount.
Eight of the officials named have since left the county after being suspended or due to court cases. Only one was retained by Governor Mike Sonko’s administration as a chief officer.
The officials opened multiple accounts that were used, abandoned and/or closed, with some being used for parallel operations, especially the revenue collection accounts, instead of being consolidated in line with the Public Finance Management (PFM) Act.
The senior county staff, in collaboration with bank employees, opened multiple accounts using account-opening documents for previously accounts with similar names, for example, Nairobi County Government Collection Account.
The money was debited from the accounts mainly through structured withdraws as this was seen as a strategy to evade reporting thresholds and break the money trail in order to conceal the ultimate beneficiaries of the money, the report obtained from the investigating agencies states.
“The cash withdrawals were subjected to ‘transfer charges’ of Sh550 or Sh660, especially cash transactions from account number 0810271586663. This is seen as a strategy to camouflage transactions in order to make them appear as funds transfer,” the report adds.
The dossier further indicted that Kidero’s private lawyer was paid Sh12.5 million drawn from one of the revenue collection accounts.
EACC Spokesman Yasin Amaro said the agency had received the letter from the FRC, adding that investigations were progressing.
“I can confirm that EACC received the report from FRC and commenced investigations immediately. However, I can’t share details of the probe,” he said.
Yesterday, DCI’s head of investigations, John Kariuki, said he could not give out details on the case as he was out of the office.
“We do receive several letters from FRC and I cannot give you information off head as I am away. I can only get details when in office tomorrow (Monday),” Mr Kariuki said, adding that at times, the DCI lets the EACC conduct a probe once it was seized of the matter to avoid duplication.
Contacted for comment, Kidero said he had not been summoned by any agency but expressed willingness to comply should he be required to submit himself for questioning.
“If there is anything I am required to respond to, I will look at the papers and respond appropriately,” Kidero said while exonerating himself from any wrongdoing. He defended the payment to his lawyer, saying it was done in his capacity as counsel for Nairobi County for legal services offered.
He added: “I am not in charge of procurement and if there was any payment done, it must have followed due process. Before payment, both external and internal auditors have to approve. And as for account opening, there were officers mandated to do the work and not the governor.”
The new probe corroborates the findings of an audit carried out by KPMG that revealed that Kidero’s administration irregularly operated 32 bank accounts, 13 of which were not disclosed in the former governor’s handover report given to the new governor last year.
The new report shows that county employers would sometimes stop using one collection account for three months then start using it again, raising suspicions the opening of multiple accounts was a strategy to layer the money.
The last account in operation stopped receiving funds/cheque deposits on August 3 last year, just five days to the General Election, yet revenue collection at the county is a continuous process.
The accounts used include General Collection Account No. 0810271586663, which was opened 02-02-2017 and is still active, and General Collection Account No. 08102633520904 opened on 17-12-2014 and closed on 17-07-2017, just a month before the elections.
Others are Revenue Collection Account No. 0810260882860 opened on 18-04-2013 and closed on 12-04-2014, Local Authority Transfer Fund Account No. 0810260947237 opened on 07-05-2013 and remained dormant, and Revenue Collection Account No. 0818264036845, also dormant after being opened on 17-04-2015.
Standing Imprest Account No. 0810260882865 was opened on 18-04-2013 and closed on 03-12-2014, while Salary Advance Account No. 08102641124028 was opened on 19-06-2013 and closed on 10-03-2014.
The dossier adds that although the PFM Act prohibits over-the-counter withdrawals of money from county accounts, in the case of Nairobi County there were several cases of the collection accounts overdrawn through over-the-counter cash withdrawals, uncleared effects facilities as well as overdrawing through bank charges collection.
Six general supply firms received money from either the six pharmaceuticals that had been paid by the county or the county itself. The directors of the general supply firms shared the same identity as the pharmaceuticals.
“From the foregoing, it’s prudent to conclude that the large amounts of money were embezzled from the revenue collection accounts of Nairobi City County government through a raft of illegal and irregular transactions,” the report concluded.
The KPMG report had noted that the Nairobi County government used five different financial systems to manage its operations during the period July 1, 2011 to June 30, 2017.
They include eJijipay, an e-payment platform, Laifoms, a revenue receipting system, Ifmis, hosted by the National Treasury, Integrated Payroll and Personnel Database for staff records and payroll as well as Jumbo Link, an online Cooperative Bank of Kenya link to making payments.