Africa-Press – Kenya. A Senate watchdog committee has directed the EACC to probe financial malpractices of about Sh100 million at Tavevo Water and Sewerage Company Limited.
While calling for the prosecution of implicated officers, the lawmakers also invited the Ethics and Anti-Corruption Commission to recover irregular payments made to the firm’s board of directors.
The Senate County Public Investments and Special Funds gave the orders after it raised concerns with the Taita Taveta County’s water utility firm over several audit queries.
The panel chaired by Vihiga Senator Godfrey Osotsi said the company is basically insolvent as it is operating on a negative working capital of Sh75.5 million.
“We want the governor to collaborate with the EACC in investigating areas of breach of the law 60 days,” Osotsi said during the grilling of Governor Mwadime and the management of the company.
The firm is struggling with debts to the tune of Sh545 million. Further, the utility firm could only collect Sh262 million in revenue against a target of Sh937.6 million, casting doubts on its sustainability.
According to an audit report by Auditor General Nancy Gathungu for the financial year ended June 2021, the water company was fingered for bloated administration costs amounting to Sh390.9 million in administrative costs against revenues of Sh262 million.
The expenditure includes Sh102.3 million in staff costs and another Sh1.5 million in training expenses which could not be supported with training plans and training needs contrary to the law.
The auditor also queried the firm over Sh6.8 million spent on the emolument of the board of directors where irregular allowances of Sh790,000 was flagged.
There were also unsupported night-out claims of Sh450,000 where the payments were not supported with evidence to confirm the claims. Further, the board held 55 sittings out of which 12 were full board meetings contrary to the law which sets the limit at a maximum of six.
Mwadime admitted to the breaches and said they are working to pump life into the company. He said he sent the substantive managing director on compulsory leave after realising that some accounts of the company were not balancing to allow for investigations.
However, the MD went to court and obtained a stay order against the decision. “We also realised the board was not constituted as per the law as some members were not even qualified to be on the board. We have advertised for three positions,” Mwadime said.
Another audit query also centered on the irregular composition of committees of the board where each had five members against the requirement of three.
The firm is also struggling with Sh254.2 million in stalled projects where in one of them, the company paid Sh2.5 million to a contractor even before they could begin the Mwatate decentralised treatment facility.
There was also the issue of Sh76.7 million paid for Nyangoro and Maktau water projects even though the works on the project had not been completed. Further, the report fingered the firm for unsupported legal fees amounting to Sh750,000 where the company could not disclose the nature of legal services offered.
“The audit queries reveal a going concern which basically means this company is dead. The patient is in ICU and it is only funding from donors that is still keeping it alive but the patient will eventually die,” he said.
In the financial year ended June 2019, the company had a negative working capital of Sh208.1 million with liabilities of Sh489.1 million against assets of Sh280.5 million.
The following fiscal year, the liabilities were Sh441.6 million against assets of Sh366.1 million resulting in negative working capital of Sh75.5 million.
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