Auditor-General Edward Ouko queries Sh5.7b AFA loans to sugar firms

Friday, August 23rd, 2019 08:00 |
Former Auditor General Edward Ouko. Photo/FILE

The  Agriculture and Food Authority (AFA) is  on the spot over Sh5.7 billion disbursed as loans to various sugar companies and cash spent on setting up of cane testing units.

Auditor -General Edward Ouko's report says Sh3.13 billion was disbursed as unsecured loans while Sh2.53 billion was spent on the cane testing unit.

The auditor said the loans were disbursed without the AFA board’s authority . In a report the financial year ending June 2018, Ouko said it was difficult for auditors to confirm the amount disbursed to each sugar company and  that there was no documentary evidence provided by the authority to confirm due diligence was done before disbursement.

Ouko says that during the financial year 2014/15, the authority disbursed Sh1.9 billion and Sh671.1 million in 2015/16 financial year while Sh548.6 million was given in the 2016/17.

“The amounts disbursed by the authority in the three years, all totalling to Sh 3.13 billion had not been captured in the financial statements for 2016/17 and 2017/18. As a result the accounts receivable as at June 30, 2017 and 2018, respectively were understated by Sh3.13 billion,” reads the report in part.

On cane testing units, AFA is being questioned over Sh450 million  spent on first and second pilot cane testing units as well as Sh2.08 billion spent on the third additional cane testing units in nine sugar mills including Mumias, Kibos, Muhoroni, Chemelil, Sukari, Transmara, Butali, Kiscolkwale and West Kenya.

The project involved the construction of the nine sugar mills and laboratories in the testing units. 

Ouko said the authority did not involve the Public Works Department for the construction and instead used own experts. He also raised concerns that the project has not been operationalised, thus its benefits have not been realised seven years since it was launched.

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