By Bura Mp Yaqub

Copyright thedailymail

NAIROBI, Kenya, Sep 12 – A parliamentary watchdog has ordered a special audit of the Judiciary’s Sh6 billion mortgage scheme, which has operated for more than a decade without a legal framework, despite handling funds in excess of Sh5.3 billion.

The Public Accounts Committee (PAC) said on Thursday it will write to Auditor-General Nancy Gathungu requesting a special audit to establish the fund’s governance structure, disbursement criteria, beneficiaries, and compliance with the Public Finance Management (PFM) Act.

Committee chair Butere MP Tindi Mwale said the memorandum of understanding (MoU) signed between the Judiciary and Kenya Commercial Bank (KCB) in 2011 amounted to a “gentleman’s agreement” that could collapse at any time.

“We are talking about five billion shillings. What happens if KCB tells you in the future, ‘We don’t have the funds, we can’t lend you for the next five to ten years’? What will you do?” Mwale posed.

The issue surfaced during PAC’s consideration of the Auditor-General’s report on the Judiciary’s financial statements for the year ending June 30, 2023.

In her findings, Auditor-General Gathungu noted the Judiciary Mortgage Scheme lacked enabling legislation and that management had not provided a satisfactory explanation for its continued operation without such backing.

She concluded that the legality of the fund and its transactions could not beLawmakers accused the Judiciary of flouting the PFM Act by running the fund through an MoU with KCB, signed in 2011 two years before the scheme formally started in 2013.

Led by Bura MP Yaqub Adow, members said it was unacceptable for a multibillion-shilling scheme to operate without regulations or competitive procurement, noting that draft rules were only prepared in October 2024,12 years after inception.

“This is close to six billion shillings, a whole year’s budget for Tana River County. It is not pocket change. Operating such huge sums without enabling legislation is a matter we cannot wish away,” said Adow.

Turkana Central MP Joseph Emathe Namuar accused the Judiciary of double standards, saying it had blocked flagship government projects such as affordable housing and the Social Health Authority on grounds of lacking legal frameworks.

“Yet here you are, running a mortgage scheme for over a decade on a mere MoU. That is hypocrisy. The scheme can be abolished because it lacks proper regulations,” Namuar said.

Chief Registrar of the Judiciary Winfridah Mokaya defended the scheme, saying it began in 2013 with seed capital from the Exchequer and has grown into a revolving fund now valued at Sh5.3 billion. She said the scheme had undergone two audits, including the current one.

“We acknowledge that the scheme has lacked a legal framework. However, since last year we have been working with the Treasury to put regulations in place. We now have draft regulations which we are keen to fast-track,” Mokaya told the committee.

She also explained that while other lenders such as Equity Bank and National Bank had been considered, KCB remained the administrator because approval to shift banks had not been granted.

But MPs dismissed the defence, insisting that procurement laws required competitive bidding and accusing the National Treasury of potentially aiding in circumventing regulations.

Aldai MP Maryanne Kitany said the special audit would help establish not only beneficiaries but also whether the Treasury itself facilitated breaches of the law by recommending KCB.

“It is crucial that any letters from the National Treasury directing the use of a specific bank be produced. If such directives exist, then Treasury may have aided in breaching procurement law,” Kitany argued.

Mathioya MP Edwin Mugo and Samburu West MP Naisula Lesuuda joined colleagues in demanding a comprehensive audit to reveal the full extent of the scheme’s operations.

“The letter with KCB was signed in 2011, but correspondence only appears from 2024,11 years later. A special audit will help auditors examine these gaps and give us a report we can interrogate thoroughly,” said Mugo.

Mwale hinted that the committee could recommend abolishing the fund altogether. “The recommendation will likely be straightforward: abolish the scheme because it lacks legislation. That will be our position,” he said.

PAC members also warned Judiciary officials not to bow to pressure from senior leadership. “Accountability rests with you as the accounting officer, not the Chief Justice. If there are violations, it is you who will be held responsible,” Mwale told Mokaya.

The Judiciary mortgage scheme, started in 2013, has only undergone two audits since inception, raising concerns over transparency and accountability in handling billions of shillings in public funds.