The Auditor General revealed that over Shillings 1.3 billion from Nairobi County, earmarked for the payment of workers, is missing from the country’s salary account.
In the audit for the year ending June 2023, Ms Nancy Gathungu notes that the reported employee wages were not reflected in the county’s payroll account.
“The amount of compensation for employees’ expenses for the year totalling Sh11,185,475,652 differs from the total payment on the payroll of Sh9,793,541,055, resulting in an unreconciled difference of Sh1,391,934,597,” Ms Gathungu states.
The Public Auditor did not disclose details of the 1.3 billion shillings, but Nairobi County responded in a BusinessDaily linked it to the payment of staff transferred from the defunct Nairobi Metropolitan Services (NMS) and not included in the payroll.
The district attributes the untraceable salaries to three-month payments to staff returning from the NMS, which ended in October 2022.
Nairobi refused to include the 1,700 employees of the defunct NMS on its payroll.
“The discrepancy of Sh1,391,394,597 relates to third party salary deductions for NMS staff paid by Nairobi City County for October, November and December 2022.
“Nairobi County has not retained the staff recruited by NMS through the Public Service Commission, but has allowed them to continue serving the remainder of their respective contracts, most of which expire in early 2024,” said Nairobi Finance Minister Charles Kerich.
When Nairobi City County signed the deed to transfer some services to the NMS in 2020, the county seconded 6,604 employees to work for the now-defunct State House-run agency.
However, Ms. Gathungu points out that when the NMS mandate expired at the end of September 2022, the agency had hired 1,700 additional workers, in violation of the contract signed with the county.
“At the end of the term of the Deed of Transfer, NMS returned 7,526 employees to City County. Of the 7,526 employees, 1,700 were not part of the personnel seconded to NMS in 2020, which means that they were hired by NMS contrary to Section 5.6 and 5.7 of the Official Notice No. 1609 dated February 25, 2020 on the Deed of Transfer,” the Auditor General notes.
In response to the BusinessDaily On Friday, Mr Kerich said that the district administration had refused to take over the workers hired by the NMS in accordance with a decision of the district assembly during an investigation into the takeover of the inspectorate officers employed by the defunct NMS.
“For those whose contracts have expired, the county has advertised the positions according to county-approved positions, and the county civil service board has now hired the majority on a probationary basis,” the county finance minister said.
The audit also found that the county had reported expenditure of ATS 161 million on paying basic wages to temporary workers and ATS 92.8 million on personal allowances in kind, but had not provided any evidence of the payments.
The county says the Sh161 million payments were made to temporary workers employed to collect revenue data, work as community health promoters, clean drains and sweep the CBD.
The county also claims to have remitted Sh1.7 billion in statutory deductions which the Auditor General reported as deducted from employees in the 2022/23 financial year but not remitted.
“Analysis of the salary data submitted for the audit revealed that the County Executive deducted statutory contributions totalling Sh1,715,817,035 from employees to Paye, NSSF and NHIF. However, no evidence was submitted for the audit to show that the deductions were paid to the relevant authorities as required,” Ms Gathungu explained.
Mr. Kerich said that the county processed and remitted all net salaries, as well as third-party and statutory deductions, during the year.
“The payments were processed through a system called ‘Jumbo Link’ of the Cooperative Bank, whereby gross salaries are transmitted electronically to the Cooperative Bank through a secure link in the form of a consolidated file, where the bank then issues EFTs and RTGS to the respective beneficiaries,” he said.
