The East African Community (EAC) has spoken out on calls by some lawmakers to investigate alleged acts of corruption at the regional body’s secretariat, saying the issues highlighted two years ago for the year ended 30th June 2017 as reported by the Audit Commission were of a “procedural nature rather than financial, and have since then been fully acted upon.”
In a statement issued Saturday evening, EAC Secretariat said the same Audit Commission “verified the available evidence provided during the audit for the year ended 30th June 2018 (yet to be debated by EALA) and confirmed successful implementation of its recommendation and issued a clean audit report signed on 12th December 2018.”
During its ongoing session of June 2019, the East African Legislative Assembly (EALA) debated on the report from its Committee on Accounts, arising from the report of the EAC Audit Commission on the Audited Financial Statements for the financial year ended 30th June, 2017.
Some MPs said the Secretariat and Secretary General Liberat Mfumukeko should be held to account for alleged loss of funds.
The Secretariat today said the alleged loss of funds on fixed assets valued at US$829,058 was rather reported by the Audit Commission as “Assets captured in various assets classes in block figures which were not individually identified” in November 2017.
The Secretariat said it engaged a professional valuer to disaggregate the figures which later on were restated in the financial statements for the year ended 30th June 2018, and the Audit Commission verified and cleared the matter.
The timing of debate is suspicious considering the unfolding developments in the region.
On July 2, 2019, the East African Court of Justice (EACJ) will make its ruling on the case filed by Burundi regarding the alleged unlawful election of Hon. Martin Ngoga (from Rwanda) as Speaker of the East African Legislative Assembly (EALA).
If the election is found illegal , EALA will have to elect again and it may be the end of Hon. Ngogaʼs speakership.
This case having been filed by Burundi, defenders of Hon. Ngoga have, for several months, reportedly been searching for any credible allegations that would enable them to sue the EAC Secretary General.
That would put pressure on Burundi and maybe push the latter to withdraw the case.
Regarding the matter of assets amounting US$64,816 reported as work in progress as at 30th June 2017, the Secretariat said the assets were later on delivered and put into use, verified by the EAC audit Commission. The Secretariat says this matter was cleared in the audit report signed on 12th December 2018.
Auditors had said in their report that six vehicles valued at US$236,808 distributed to the Partner States could not be verified in November 2017.
The vehicles were purchased in the framework of implementation of Avian Influenza Project, with the support from the European Union and transferred, in 2011, to the Ministries responsible for Livestock in the Partner States.
In November 2017, the Audit Commission did not manage to go and verify the existence of the vehicles in the Partner States.
The Secretariat said it has since then got letters from Partner States indicating the state of the vehicles and they have been removed from the books as ownership was transferred to the Partner States.
The matter was also cleared by the same Audit Commission in its report signed on 12th December 2018.
The audit has also indicated alleged unsupported expenditure and transfer of funds.
The EAC Secretariat received a grant disbursement of US$ 356,000 in March 2016 for the implementation of Action for Reinforcing Veterinary Governance in Africa from the African Union Commission – Inter African Bureau for Animal Resources (AU-IBAR).
In November 2017, the Audit Commission could not confirm the propriety and validity of the reported expenditure and transfer of US$ 178,761 and US$ 117,000 respectively as at 30 June 2017 since the original supporting documents were not provided for audit review.
The grant agreement stated that original copies are a property of AU-IBAR which has its offices in Nairobi.
It’s understood IBAR made copies of the original documents and certified them and availed the certified copies for the expenditure of USD 178,761 and a receipt acknowledging receipt of USD 116,949 from the project Headquarters.
“After a physical visit at the AU/IBAR offices, the matter was also cleared by the same Audit Commission in the audit for the year ended June 2018,” said EAC.
Additionally, auditors noted Payroll variances between the interface file and the general ledger for Secretariat.
During the period under review, the short term (temporary) staff were paid using an Excel template and reflected in the accounting software (Sun systems).
EAC said annual allowances such as Education and Spouse Allowances which are paid only once per year were not paid through the monthly payroll.
The Audit Commission, it has emerged, did not report this as a loss of money, but a recommendation to capture all staff, permanent and temporary, in the personnel management software.
The Secretariat said this has since been implemented and confirmed by the EAC Audit Commission.
The MPs also commented on the reallocation of funds within the Staff Emoluments Budget of the EAC Secretariat.
The 35th meeting of the Council of Ministers directed the EAC Secretariat to reallocate funds within its current budget to cater for the recruitment exercise (EAC/CM 35/Directive 62).
EAC today said this approval of reallocating the USD1,342,550 constitutes a one off waiver from application of said provision on restriction by the Financial Rules and Regulations.
It will be recalled that the procurement of kitchen equipment worth USD212,987 for the Secretariat in 2014 sparked a storm.
The Audit Commission, said the Secretariat, performed a physical verification of the assets of the community and saw kitchen equipment delivered and valued at USD 212,987.
Officials said at the time of audit in October 2017, these equipments had not been put to use, due to the fact that, through procurement process, EAC had not been able to find a provider of catering services to run the kitchen and restaurant.
“The current status is that during a recent procurement process, EAC Management had managed to procure a service provider to operate the cafeteria and in so doing utilize the kitchen equipment. The service provider has been provided a Letter of Award and a contract is being drafted by Office of Counsel to the Community for the selected service provider,” said the Secretariat, adding, “With this, EAC management will ensure full utilization of the kitchen equipment.”
An independent lawmaker from Kenya told ChimpReports in Nairobi that the debate of the report of the EALA Accounts Committee on the EAC Audit for fiscal year 2016/2017 serves as an opportunity to “fabricate some allegations and add some deformations and lies.”
Speaking on condition of anonymity to avoid retribution, the lawmaker noted: “These maneuvers are being done when their authors know very well that the Audit Commission Report of the following year (2017/2018) cleared audit queries mentioned in the 2016/17 report and gave a “clean” Audit opinion to all the 18 Organs, Institutions and Projects which were audited from September to December 2018. This is just politics of intrigue which will hurt the EAC.”’
In 2012, a contract was entered between EAC and M/s. Avtech Systems Ltd for a sum of USD 582,485.93 for supply, delivery and installation of security equipment.
As provided for in the agreement, 50% of the payment be made on the signing of the contract and supplier providing a valid Bank Guarantee, and 30% paid based on proof of shipment and/or delivery/installation of equipment.
Due to deficiencies in the equipments, to date the Secretariat said it was yet to pay 20% of the contract ( USD116,497.18).
Officials said as of May, 2019, the matter is under Arbitration (Arbitration No. 1 of 2018) at the East African Court of Justice.
The MPs also discussed the alleged shrinking support from Development Partners.
Two years ago, the Audit Commission Report described a slight decrease in direct funding from Development Partners to the EAC Organs and Institutions.
The EAC Management said the mode of support provided to Secretariats of Regional Economic Communities (RECs) to coordinate regional projects is changing towards Donors’ preference for Indirect Funding (provided to Partner States Institutions implementing the projects).
“That notwithstanding, the EAC Secretariat registered an increase of 15% on Direct Funding from its Development Partners during the following financial year 2017/2018,” said the secretariat.
“Records on funds mobilized by the Secretariat (USD298,584,305 from USAID, African Development Bank, the World Bank, the Swedish International Development Agency, etc., plus Euro 131,686,466 from the European Union, KfW, etc.) and transferred by Development Partners to implementers located in the Partner States (indirect funding) reflect a significant increase in Donors support.”