Senate watchdog committee: Nakuru Sh200m loan to be probed

Wednesday, August 14th, 2019 00:00 |

A Senate watchdog committee has recommended the Ethics and Anti-Corruption Commission (EACC) investigates former Nakuru Governor Kinuthia Mbugua over a Sh200 million bank loan that cost the taxpayer about Sh50 million in interests and penalties.

The Senate’s County Public Accounts and Investments (CPAIC) wants investigations instituted against Mbugua, currently State House Controller, for negligence after his successor, Lee Kinyanjui, failed to satisfactorily explain why it was borrowed and accrued monumental interests.

Appearing before the committee to respond to the 2017/18 audit queries, Kinyanjui took responsibility of the loan facility advanced to the county government but regretted that it had five years to be cleared.

“This loan was taken back in 2013 and we have been servicing it since we came to office until March 31 this year when we retired it,” Kinyanjui told the Senator Moses Kajwang’-led committee.

Auditor General Edward Ouko had noted that the county government took the overdraft from Family Bank during Mbugua’s administration to ostensibly pay workers’ salaries in 2013.

Provide solution

However, the lawmakers were curious about the transaction after the county finance officers disclosed in the financial statements that the county had been incurring at least Sh700,000 in interest and penalties since 2013.

Led by the committee chairman, the legislators quizzed the county government on why it had taken long to settle the loan and why the signatories failed to negotiate the repayment terms and interests applicable.  

“Obviously, this loan was a bad idea. This loan ought to have been retired earlier even before you came into office. This loan ought to have been your first priority. It ought to have been dealt with as a matter of urgency because spending Sh760,000 a month. The county was bleeding as a result of this,” said Kajwang’.

Things almost got out of hand, when Kinyanjui said he could not state the aggregate amount the county used to settle the loan.

“We retired the loan on March 31, so the total amount paid will be captured in our financial report 2018/19,” said Kinyanjui.

Kajwang’ ordered the governor to provide a solution by his county assembly authorising the loan as well as the total amount the county incurred on the loan. 

He said the committee will recommend that EACC investigates the deal.

Proper negotiations

“This could be a smoking gun and it is one of those things that we might want EACC to take a keen interest in,” he said.

Isiolo Senator Fatuma Dullo said proper negotiations and appropriate settlement plans should have been put in place on when the money should be paid.

Kinyanjui was also put to task to explain why Sh1.2 billion annual allocation was not utilised as at the end of the financial year 2017/18.

In defence, the Governor said money was not lying idle in the accounts and that the same had been budgeted for projects but had not matured for payments to be made at the closure of the financial year.

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