Auditor Questions Spending by Kenyan Regulator

The Communications Authority of Kenya (CA) is in the news again. In Kenya, money routinely gets lost. It appears billions of Kenyan shillings just take a walk around the block, end up in the woods and cannot find their way back to where they belong. Our currency simply likes wandering. The outgoing Auditor General, Edward Ouko, looked through the CA books for the financial year 2017/18 and his report is an interesting read. CA seems to have outdone itself. For the board of directors, Christmas came early.

The queries include KSh 2.1Mn (USD 20,000) that the board of directors pocketed for Christmas shopping in form of vouchers without approval from the parent ministry or the National Treasury.

One would hope they employed a person to play the role of Santa and perhaps even put him on retainer awaiting next Christmas. I will gladly take this role.

One of the (very) basic roles of CA is to receive annual license fees from telcos. It is woeful at this task.

The agency also failed to account for KSh 26Mn (USD 250,000) it received as annual frequency license fees as several anomalies were noted during the audit.

The auditors were not provided with explanations for a curious finding: in the breakdown of annual operating license there were negative entries worth KSh 802,975 (USD 7,700). How this can happen is a mystery that only CA can explain.

It also seems that tracking invoices is a problem:

…invoices raised in the month of June 2018 amounting to KSh 1.3Mn (USD 12,500) in respect of annual frequency and KSh 3Mn (USD 28,900) in respect of annual operating licenses included in the payments in advance were not provided for audit verification.

Directors of CA enjoy nice benefits. We cannot blame them. For example, how can they regulate broadband if they do not use it? Forget the cost – that is a small matter in their quest to discharge this noble duty:

A total of KSh 53Mn (USD 511,000) paid to directors at the authority has also been questioned by the auditor. Specifically, KSh 3.3Mn (USD 32,000) was paid to the directors on a monthly basis for broadband but the details were not provided for audit verification.

Hey, it is raining cash. One does not even have to be a member of the board. Just getting your foot in the door (as an employee) will go a long way in making sure you live well. A nice house, taxpayer-funded travel and other unspecified perks come your way. Surely, if you are to regulate the fast-paced telecoms industry, it is only fair that you live in the fast lane?

There is a further KSh 1.1Bn (USD 10.6Mn) that was paid to employees in form of travel allowances, house benefits and perks but the auditor general says the payments were not authorised and ought not to have been made as no board meeting authorised them.

CA clearly does not believe in budgeting. In a one-day ICT forum, KSh 13Mn (USD 125,000) of taxpayers’ money was used (more than 5 times above the threshold).

The authority procured a service provider for the event but ended up spending KSh13 million instead of the allowable threshold of KSh 2Mn (USD 19,200).

The name of the game is: spend like there is no tomorrow. If you spend Ksh 13Mn on one event, then spend Ksh 20Mn on the next one. Well, that is precisely what CA did.

The authority further paid KSh 20Mn (USD 192,000) to another firm in respect of an event dubbed “Kikao Kuu” in Busia County without a signed contract agreement, contrary to section 44(1) of the Public Procurement and Asset Disposal Act, which requires an accounting officer to approve and sign all contracts on behalf of the procuring entity.

For the non-Swahili speakers, “Kikao Kikuu” means “big meeting”. How apt! Not even content with spending, it seems CA decided to give their budget away.

KSh 11Mn (USD 106,000) was used in the design, printing, supply and delivery of branded giveaways such as umbrellas and spiral notebooks.

In my next trip to Nairobi, I will collect my umbrella and spiral notebook from the CA office.

However, in all this, I am happy with this system. At least CA gets audited and we can ask questions. Ahem, getting the answers to those questions is a whole different ballgame. We are sorely reminded that there are regulators in this region who cannot be questioned. One day, when I am seated at the beach, under a CA-branded umbrella, I will write about them in my glossy CA-branded notebook.

Joseph Nderitu
Joseph Nderitu
Joseph Nderitu is a consultant who specializes in revenue assurance. He is currently contracted as Head of Revenue Assurance and Fraud Management at Vodacom's operation in Tanzania, having previously served in the same role at Vodacom Mozambique.

Before his work with Vodacom, Joseph was an internal audit manager for Airtel, with responsibility that covered their 17 countries in Africa. Whilst at Airtel, Joseph led reviews of the Revenue Assurance, Customer Service and Sales & Marketing functions.

Prior to his stint at Airtel, Joseph was an RA manager at Safaricom in Kenya. He holds an MSc Degree in Information Systems.