Edward Ouko stumbles on Natembeya’s shortcut to prosperity

Sometimes you can read a judge’s temperament and almost predict the direction of their ruling from their analysis of a case. On other occasions, rarely, you can tell from the way they lay out the arguments before them.

So, when Justice Anthony Mrima read a petitioner’s learned counsel Mr Obondi’s opening submission he quoted the lawyer for citing the workmanship of Philosophers Aristotle and Plato to uphold the rule of law and the social contract.

Former Auditor-General Edward Ouko

But for his opponent, Trans Nzoia County lawyer, the judge said Mr Simiyu cited a litany of laws including the constitution, Public Finance Management Act, County government act and several authorities. The Judge then went on to dismantle most of these assertions by defining how the constitution should be interpreted in spirit and not merely statue.

According to Justice Mrima, county governments that have been going around hiring private auditors to check supplier debts should stop, that role belongs to the Auditor-General. “It readily comes to the mind of this court that in most cases when a new incoming Governor takes office, there is the desire to start the tenure on a clean platform and to readily understand all financial and governance issues in the county,”  

“However, whereas the Governor is the Chief Executive office of a county, he is like a caged animal, only able to move but within the cage. In this case, the cage is the constitution and law,” Mr Justice Mrima said.

Judge Mrima ruled that it is only the Auditor-General, who has the mandate to audit the government and any administrator who wishes to probe pending bills must request that office to conduct the audit or hire external auditors.

The judge has thrown out an audit report authored by celebrated former Auditor-General Edward Ouko whose authority and former reports were used by Trans Nzoia county to review supplier debts.

The Kitale court ruled Edward Ouko’s audit report on Trans Nzoia pending bills must be returned to his successor, Auditor-General Nancy Gathungu for vetting and who will have the last say on whether to use the report or reject it.

The court found that the former auditor had attempted to sneak back into his job when he agreed to help Governor George Natembeya investigate Kes2 billion supplier debts left behind by former governor Patrick Khaemba.

Seizing properties

The report, ‘Natembeya road to Prosperity’ lifted from his campaign tag line, drew political backlash from the former Governor’s camp having cited him, amid accusations of threats to seizing the former county boss properties.  

As Kenyan politicians run out of debt funded largesse to steal from, the fight has shifted to overdue bills left behind by former county and national government regimes with over Kes700 billion on the table.

The National Treasury and counties have refused to pay government suppliers, setting up audits of pending bills to unveil the networks of former regimes still clinging to these funds.

But suppliers and networks of the former administrations are fighting back accusing the new sheriffs of laying ground work for rent seeking to clear pending bills and outright witch-hunting of former politicians.

“The petitioner stated that the findings on the pending bills had been tailored to lay a platform for denial of lawful bills and rent-seeking,” the judgment reads.

The Kenya Kwanza government had promised to pay supplier on time during campaigns acknowledging the negative impact cash flow delays had caused to the economy. Kenya’s large pending bills is a double edged sword costing the economy billions in cash flow while aggravating loan defaults and closure of businesses.

According to the World Bank, government arrears, which had risen to Kes537.2 billion by the end of March, curtailed the flow of cash to the private sector, leaving a lot of companies without the cash to meet their obligations.

Read also: Counties promised hope, but some look set on delivering fraud

Audit of debts

However, upon assuming office, the Kenya Kwanza government dropped the plan in their campaign promises to convert pending bills into a bond, fearing it will blow up debt figures above the prescribed ceiling. Latest statistics show the debt has already crossed that threshold. 

The Treasury backpedaled on the intended securitisation, calling for the establishment of a verification committee instead, to advise on how best to settle the load of arrears.

Although Kenya missed a key deadline set by the International Monetary Fund (IMF) on clearing pending bills, it has sought to avoid sanctions given the push by state organs to delay the benchmark on transparency concerns and to conduct audits of the debts.

The IMF had seta a September 30 deadline for the government to present a strategy on how to tackle its close to Kes728 billion in pending bills as part of the multibillion loans it has given the country.

It is unclear the impact of the ruling on this government policy and whether it will mean that county and the national government cancel all parallel audits and let Ms Gathungu to do her work and while at it pay suppliers even if they are linked to the former regimes. 

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