How Former Meru County CECs Disappeared Without Paying Loans -Auditor General

Former Meru County Governor Peter Munya could find himself in hot water as a report from the Auditor General reveals that members of his executive team failed to service loans they had secured from the county’s executive staff housing fund. According to the report, the outstanding loans totalling Ksh. 120,464,987 were secured by twelve (12) former county officials. They were nine (9) County Executive Committee (CEC) members, a County Secretary, a Chief of Staff, and a Legal Officer.

The loans were secured between January 20 and March 4, 2017, according to the report, and were to be repayable over terms ranging from twelve (12) to twenty (20) years. The loans were obtained in violation of the Salaries and Remuneration Commission’s circular reference no. SRC/CGOVT/3/61 of September 30, 2014, which states that each County Executive Committee (CEC) Member is entitled to a mortgage of Kshs. 3,00,000 at a 3% annual interest rate repayable during the borrower’s term of service.

One now wonders why the management did not explain why the repayment period was not limited to each borrower’s term of service as required by law. In the circumstances, the fund violated the Salaries and Remuneration Commission (SRC) Circular. The report notes that the loans were issued in March 2017, just five months before the elections, when their contracts were about to expire, yet they were given loans to be repaid over 20 years, whereas CEC’s contracts are only for five years.

The loans were then issued just five months before the 2017 elections, in which Kiraitu Murungi defeated then-Governor Peter Munya; the CECc, therefore, had their contracts terminated by the entry of the new administration. Further, a review of records maintained by the Fund indicated eight (8) borrowers had defaulted on their loan repayments, totalling Ksh. 15,132,453. Even though management indicated that legal enforcement of recoveries against three borrowers with arrears totalling Ksh 7,191,391 had been initiated, no evidence was provided to confirm the assertion.

Further, no satisfactory explanation was provided as to why recovery measures on the nonperforming loans were not taken in due time. Failure to recover the outstanding amounts may result in the loss of public funds. The funds’ committee allowances of Ksh. 301,000, which includes Ksh. 236,000, were not supported by supporting documents such as meeting notifications and agendas, attendance registers, and signed minutes. As a result, the occurrence, accuracy, validity, and value for money of the Ksh. 236,000 expenditure could not be confirmed.

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