Uhuru thwarts MPs’ attempt to use public funds to clear loans
President Uhuru Kenyatta has rejected an attempt by Members of Parliament to set up a special fund through which taxpayers’ money would be used to offset their loans and mortgages if they lose their seats.
The MPs had sought the establishment of a Special Fund from which their outstanding loans and mortgages would be serviced once they ceased being lawmakers.
In a memorandum to MPs, the President expressed reservations on aspects of the Public Finance Management Act, 2012, that provided that the Parliamentary Service Commission (PSC) may, with approval of the National Assembly, establish any other funds for the purpose of Parliament or a House of Parliament.
Explaining his reservations, Uhuru noted that amending the law in the manner proposed in the Bill may lead to duplication of funds intended for Parliament since one already exists.
He added that the provision in the Bill may also have adverse impact on the principle of separation of powers between the Executive and the Legislature with regard to management of public funds.
And in a bid to align the new law with the presidential directive, the MPs have moved to set up several schemes to meet their objective under a proposed amendment to the Public Finance Management Act.
The schemes will, however, be funded by MPs through contributions as opposed to the taxpayer as previously proposed.
Addressing the House on the matter during debate on the Presidential Memorandum, Leader of Majority Amos Kimunya said Parliament needed such regulation for MPs to benefit from the fund.
“To fully accommodate his reservations, the President recommends that the Bill be amended to permit the establishment of other parliamentary funds, but limit the purpose of such Funds to cater for Parliamentary Mortgage, Parliamentary Car Loan and the Parliamentary Catering, which indeed was the intention of the Bill,” Speaker Justin Muturi said in his communication to the House.
The National Treasury had also expressed reservations about the move, warning that the Fund was likely to be misused.
“Our concern is that there is a likelihood that the Fund will be open to misuse and, therefore, advise against its formation,” Treasury Cabinet Secretary Ikur Yatani told the Finance Committee when he appeared before it.
The Finance Committee, which was tasked to address the presidential recommendations, resolved to allow the PSC with the approval of the National Assembly, to establish several public funds, namely, the Parliamentary Mortgage (Members) Scheme Fund, Parliamentary Mortgage (Staff) Scheme Fund, Parliamentary Car Loan (Members) Scheme Fund, Parliamentary Car Loan (Staff) Scheme Fund, and the Parliamentary Catering Fund.
Yesterday, members unanimously passed the motion. It was, however, an uphill task for members to overturn the presidential memorandum as two thirds (233) of the membership are required.
Moving the motion, Finance Committee vice-chairman Ndirangu Waihenya said it was the position of MPs to concur with the President’s directives.
In the last Parliament, PSC, through its Car Loan Scheme, revealed it had outstanding loans amounting to Sh213.1 million for MPs and parliamentary staff.
The PSC is tasked to fully recover mortgages and car loans given to current MPs before their terms of five years lapse.
Clerk of the National Assembly Michael Sialai assured the country then that no cent will be lost, and the MPs will not have to surrender their houses and vehicles.
He assured then that a majority of MPs were sure to clear their outstanding balances before the 2017 elections.
“We’ve scheduled the repayments to their terms. Most members would have cleared their loans by the expiry of their terms,” Sialai explained.
In a circular issued three months before the 2017 elections, MPs were advised not to rely on their monthly pay-slip deductions to repay the money due but to instead make additional payments from other sources.
The commission usually holds the vehicle’s logbook and charge the title in the case of land as security which is released to the owner upon completion in repayment of the loan. The lawmakers are entitled to a Sh20 million mortgage and a Sh7 million car loan that they are, however, required to repay on or before the end of parliamentary terms.
The 416 members of the bicameral Parliament are also entitled to a Sh5 million car grant, which they do not repay.
In 2017, three months before the general election, more than 100 MPs risked having their luxury cars repossessed to recover outstanding loans at the end of their tenure on August 7.