Anti-graft agency reveals how NYS cash is stolen

The Ethics and Anti-Corruption Commission (EACC) has exposed corrupt practices in the procurement, finance and internal audit functions at the National Youth Service (NYS).

In a report that was submitted to Devolution secretary Anne Waiguru on Monday, the anti-graft agency observed procurement guidelines were being flouted including purchase of goods at inflated prices.

Prices for various items were above those set by the Public Procurement Oversight Authority (PPOA) and the EACC has called for review of accounting and procurement functions at NYS.

“I look forward to prompt implementation of the recommendations made by the EACC in this report,” the Cabinet Secretary said at the Kenya School of Monetary Studies, Nairobi. The event was attended by EACC chief executive Halakhe Waqo and deputy secretary Michael Mubea.

A review of the NYS draft procurement plan indicated that a ream of photocopying papers was being bought at Sh1,200 instead of the Sh420 set by the oversight authority.

Items like slashers were purchased at double the Sh200 allowed by the PPOA while computers were bought at Sh103,000 instead of Sh44,707. Laptops were procured at Sh105,000 instead of Sh40,352. The NYS was accepting jembes at Sh900 instead of Sh451.

Junior officers were allowed to approve contracts worth more than Sh500,000 in breach of the law.

The report cites purchase of a Sh43 million air compressor that was signed by the officer in charge of mechanical and transport branch.

“This is a loophole for corrupt practices. The principal secretary, state department of planning, should ensure that all contracts above Sh500,000 are signed by the accounting officer,” the 50-page report reads.

READ: Court freezes 20 bank accounts in NYS scam

The report highlights various issues that require urgent intervention to promote good governance, integrity and tackle corruption in the NYS.

The EACC carried out the assessment between July and September, 2014 following a request by Ms Waiguru in response to graft that eventually saw the ministry lose Sh791 million.

Investigations revealed that Sh791 million was lost in suspicious payments to various private companies and that there was conspiracy to defraud the NYS Sh695 million in respect of committed disputed transactions.

The scam has caused concern over the integrity of the government e-payment platform, and the leadership at the NYS which saw its budget for the current fiscal year raised to Sh25 billion — well above some ministries budgets.

The EACC investigating team also established that some bidders were using different but related companies to win more contracts.

Two or more companies had the same postal address, plot number and directors with the EACC saying this was a loophole for bid rigging, conflict of interest and bias.

Contracts were also awarded to the highest bidders in breach of the law that demands tenders be awarded to the lowest evaluated price.

NYS officials were amending bids to ensure their favoured suppliers are awarded contracts. For instance, out of the 317 prequalified suppliers of spare parts, only three firms were invited for bidding. Cash records were poorly kept, offering a window for fraud.