The Public Accounts Committee (PAC) on Tuesday, November 18, raised concerns over the disbursement of billions of shillings to Kenya Airways, questioning the National Treasury’s financial accountability.
The session, which scrutinised the Treasury’s audit report for the financial year ending June 2024, uncovered several alarming irregularities related to public money management.
Chaired by Garissa Woman Representative Amina Udgoon Siyad, the committee reviewed findings by the Auditor-General that flagged possible misuse of funds, illegal expenditures, and breaches of financial management laws.
“We are dealing with very serious questions of accountability. These are huge sums of public money, and Kenyans deserve clear answers on where their taxes are going," she said.
According to the audit report, the National Treasury transferred Ksh10 billion to Kenya Airways during the 2022/2023 financial year as an on-lent loan.
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This brought the airline’s total loan exposure to Ksh41.27 billion, disbursed between 2019 and 2022.
Shockingly, it was revealed that these funds were released before any formal loan agreements were signed.
"This Committee finds it unacceptable that billions were released without any signed agreements. How does the Treasury justify lending public money informally?" Siyad added.
The Auditor-General further disclosed that interest and penalties accumulated on the loans raised the total debt to Ksh43.048 billion by December 2022.
In addition, the government stepped in to pay Ksh12.326 billion on behalf of Kenya Airways to settle a defaulted foreign loan, including Ksh7.8 billion spent under Article 223 of the Constitution.
"We did not see any documentation showing how the Treasury intends to recover these amounts from Kenya Airways. There is no repayment plan, no security offered, and no formal agreement," an Auditor-General representative told the committee.
As it stands, the audit concluded that the recoverability of Ksh55.37 billion owed by Kenya Airways could not be confirmed.
In the same session, PAC reviewed the Treasury’s controversial expenditure of Ksh6.196 billion to purchase a 60% stake in Telkom Kenya.
The transaction was undertaken under Article 223, which allows the Executive to spend without parliamentary approval under certain circumstances.
However, MPs pointed out that despite the Treasury later seeking approval, Parliament never ratified the spending.
"This is a clear breach of the law. You cannot spend over six billion shillings and then hope Parliament will rubber-stamp it afterwards," Funyula MP Wilberforce Oundo said.
Another damning finding revealed wasteful expenditure linked to delayed payments to a contractor.
Although the Ministry had acknowledged a debt of Ksh235.6 million, its failure to pay led to a court judgment of Ksh327.19 million.
According to PAC, this meant taxpayers were saddled with an additional Ksh97.27 million in interest and legal fees.
"This is a classic case of negligence. Taxpayers should not bear the burden of interest and legal fees that could have been avoided with timely action," Siyad added.
In response, Siyad directed Treasury officials to present all relevant documentation.
"We want to see the loan agreements, the repayment frameworks, and the justification for invoking Article 223. If this paperwork does not exist, then someone must take responsibility," she stated.
Elsewhere, a section of MPs have expressed concerns over a potential loss of over Ksh6 billion in Hustler Fund money that borrowers have not repaid.
During a meeting on Tuesday, November 18, lawmakers from the National Assembly's Special Funds Accounts Committee questioned the fund's Chief Executive Officer, Harry Henry Tanui, demanding answers about the whereabouts of the money.
The MPs have called for a comprehensive investigation into the funds to determine whether the money is safe or has been lost, although the CEO has dismissed claims of any financial loss.
During the session, committee members raised questions about the accountability and management of the Hustler Fund, with some expressing uncertainty about the actual status of the borrowed funds.
"So up to now, we don't know whether money is lost. We don't know whether money has been stolen, but we just know we need to order to know if the money is there, and it is safe? So these documents will help us make a ruling whether Hustler Fund is competent or incompetent in its functions," one MP stated.
Another legislator highlighted the stark disparity between the funds disbursed and the amounts recovered, raising further alarm about the fund's sustainability.
"The CEO has confirmed they have already received Ksh14 billion from Treasury, from Exchequer, and only Ksh1.4 billion is refunded. You can mathematically say over 12 billion is already," the MP noted.
