Can’t pay, won’t pay: Traders face auctions

The government’s real position on pending bills has become a puzzle as senior government officials continue to issue different statements on the money owed and paid to suppliers and contractors.

Whereas the Treasury says State corporations are yet to pay bills amounting to Sh292.9 billion, Cabinet Secretary Ukur Yatani has not publicly stated how much each of the entities owes, leading to further confusion.

Then there are what the Treasury has described as historical pending bills. Since November, Treasury officials have not responded to queries by the Sunday Nation on how much each of the State corporations owes.


“We are still compiling the report before releasing it,” a senior official said.

In mid-January, President Uhuru Kenyatta said that over 70 per cent of the pending bills had been paid.

“I am pleased to note that, following my directive in November 2019 that all verified and genuine pending bills be paid immediately, about 70 per cent of pending bills owed by the national and county governments, and verified as payable, had been paid by December 31,” said the president.

But CS Yatani, in a meeting with parastatal chiefs a fortnight ago, said only Sh2.2 billion of the Sh292.9 billion had been paid.

The Sunday Nation has learnt that Ethics and Anti-corruption Commission (EACC) detectives have camped at the National Youth Service (NYS) for about two months investigating the so-called historical pending bills.


Their counterparts from the Directorate of Criminal Investigations (DCI) are already prosecuting former officials of the troubled institution on corruption-related charges.

The EACC officers descended on NYS in January and collected all documents relating to companies that supplied goods in the 2018/19 financial year.

Director-General Matilda Sakwa declined to comment on the issue, but multiple sources say that the finance, procurement and accounting departments are in limbo, with the officers awaiting the conclusion of the EACC operation. The EACC declined to comment on the matter.

The NYS and the Prisons Service owe suppliers over sh15 billion. The NYS bills, amounting to about Sh9 billion, date back to 2013. The properties of some of the suppliers have been auctioned due to non-payment of bank loans.

Suppliers who spoke to the Sunday Nation said they had been subjected to at least seven verification processes, but those who qualified to be paid have not seen even a cent.


“It seems like the verification process and the endless investigations are what the government is using as an excuse not to pay us. Officials are misleading the President that we are about to be paid,” said one supplier. “How do they plan to pay all that money by the end of the financial year?”

Last month, Treasury Principal Secretary Julius Muia, in a letter to his Youth counterpart Julius Korir, ordered new verification.

“From your request, we note that verification of the pending bills is still ongoing. In view of this, the State Department for Youth is advised to ensure that all historical pending bills are verified by the recently constituted multi-agency team on pending bills. The National Treasury will only consider requests for additional funding based on actual verified pending bills,” said the letter dated January 28, 2020.

The PS acknowledged that the government owes suppliers a staggering Sh9,316,208, 239.65.

At the Prisons Service, suppliers are owed Sh6 billion. On Tuesday last week, the suppliers were teargassed when they demonstrated in Nairobi streets demanding a meeting with senior government officials.


Some 2,900 suppliers are demanding Sh6.2 billion for items delivered to prisons across the country between 2009 and June 2018.

State Department for Correctional Services Principal Secretary Zeinab Hussein has frozen the payments, citing audits showing that the business was “irregular” or “illegal”.

The traders, some elderly and others disabled, tried to enter Ms Hussein’s Teleposta Towers office to seek audience with her but police dispersed them.

“Mrs Hussein, we have children in our homes. We want them to go to school like yours. Why are you oppressing us?” cried Lillian Ndeda, who says she has been supplying items to Busia prisons.

“We’ve been condemned unheard,” said Abraham Milimo, a food supplier in Kakamega prisons.

Their woes began when Ms Hussein took office in the July 2018 reshuffle. She came in with a new broom, transferred all prison bosses and cancelled all tenders involving prisons. As a result, several suppliers were put under scrutiny, but they have been agitating to be paid what they are owed.


Ms Hussein, in a press statement last week, gave a my-hands-are-tied verdict on the claims, citing audits.

“To commence the settlement of these outstanding claims, the department wrote to the National Treasury on November 1, 2018, requesting a team of auditors to verify the claims. The National Treasury commissioned a team of 40 auditors, who took 60 days to scrutinise and review all the outstanding claims,” she wrote. “The findings of the National Treasury auditors were that all outstanding claims were irregular and some were illegal and therefore the team could not recommend any payment.”

The PS added that a further round of audits involving the Ethics and Anti-Corruption Commission, the Directorate of Criminal Investigations, the State Law Office and the Treasury also came to the conclusion that the suppliers did not deserve payment given that they did not meet the required criteria.

At a recent meeting between the Treasury and chiefs of State corporations and semi-autonomous government agencies, it was agreed that disciplinary action be taken against CEOs who fail to clear the pending bills by end of June.


“The issue of budgeting for resources that we do not have and the matter of paying what is owed to contractors and suppliers yet we continue to launch new projects is a major contributor for the worrying state of the economy,” Mr Yatani said at the meeting held at the KRA offices in Nairobi.

“We have to arrest this situation before it gets further out of hand.”

The State corporations and semi-autonomous agencies were also given up to March 1 to drop cases in court and seek arbitration. They were also asked to consider a debt swap.

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