Some county officials demand bribes from suppliers before they can be paid.
An audit report has revealed a complex web of shady deals in counties where payments meant for small suppliers with no "connections" to top officials in the devolved units are cancelled and the funds diverted to those in good books.
The shady deals, according to the report, are mostly done in the last month of the financial year on the pretext of "missing documents" even though such payments have been approved by the Controller of Budget.
The damning revelations are contained in the latest report for county executives for the financial year ending June 2024, in which transactions worth over Sh10.9 billion were flagged by Auditor-General Nancy Gathungu.
The growing practice has left contractors and suppliers who do business with the counties, but are unwilling to part with "something small" to get their payments, continuing to lead a dog's life.
Some suppliers have died in the process, while those who have survived have been left to struggle with suicidal thoughts as they come under pressure from lenders. Others have chosen to close their businesses.
In a sign of how entrenched the practice is, Governor Anyang' Nyong'o's Kisumu County cancelled up to 4,127 transactions worth a whopping Sh2.6 billion without any justification.
The report found that the county executive failed to provide evidence of the transactions in the form of voided payment vouchers, requests to void, National Treasury approvals and Exchequer requisitions from the Controller of Budget.
In addition, reconciliations of voided payments to pending accounts payables and cancelled payments were not provided for audit.
Governor Paul Otuoma's Busia County cancelled Sh2.1 billion worth of transactions related to development and recurrent expenditure.
The highest voided transactions were in the month of June 2024, amounting to Sh772.6 million, with no explanation provided as to why the payments were voided after being approved by the Controller of Budget.
Furthermore, no evidence was provided to confirm that the Controller of Budget was informed of the cancellation of the payments in order to make the necessary adjustments, contrary to Section 92(3)(c) of the Public Finance Management Act, 2012.
The provision of the law states that if a government entity or other public body encounters a serious financial problem or anticipates serious challenges in performing its financial function or meeting its financial obligations, it shall immediately inform the Controller of Budget and the Commission on Revenue Allocation.
The Kajiado County government cancelled some 1,922 transactions worth Sh2.28 billion without explaining the use of the funds originally intended to pay for the voided transactions.
The administration of Governor Joseph ole Lenku also failed to declare the voided payments as outstanding debts in the following financial year.
Appearing before the Senate County Public Accounts Committee on Monday, Kisii Governor Simba Arati was questioned by committee members over 604 voided transactions worth Sh232.3 million.
The county boss told the committee, chaired by Homa Bay Senator Moses Kajwang', that the affected suppliers and contractors were yet to be paid.
It emerged that some suppliers were owed as little as Sh12,000 by the county executive, with the average voided transaction being Sh100,000.
“These voided transactions are for small suppliers; the people we call regular hustlers, yet they delivered services,” said Nairobi Senator Edwin Sifuna.
“This problem is not only in Kisii. Even in Nairobi there is a preferred list of people who have spoken well and those who don’t want to play the game have their payments cancelled,” he added.
Senator Kajwang' said the problem exists in many counties, adding that the system needs to be tightened so that once the Controller of Budget approves payments, it is almost impossible to reverse them.
“This is scandalous and it is something that eats many counties. It is like a cartel-like operation where people with good connections are being paid while others are left crying despite delivering on their part,” said Tharaka Nithi Senator Mwenda Gataya.
Governor Abdulswamad's Mombasa County cancelled transactions worth Sh921 million that had been uploaded for payment.
Included in the expenditure is an amount of Sh412.9 million representing payment requests to suppliers and statutory deductions that were later cancelled.
However, the voided payment vouchers, requests to void payments, National Treasury approval and Controller of Budget Treasury requisitions were not made available for audit.
James Orengo's Siaya County also cancelled 1,500 transactions worth Sh560.6 million, with management failing to explain why the payments were cancelled when they had been approved and whether they were subsequently paid.
In Nyeri County, 722 transactions worth Sh527.2 million were cancelled but no evidence was provided to confirm that the Controller of Budget had been informed of the cancellation of the payments in order to make the necessary adjustments and approvals.
However, the Governor Mutahi Kahiga-led administration later paid 10 transactions amounting to Sh3.9 million.
According to the report, a review of the Integrated Financial Management Information System ledgers provided for audit revealed that transactions amounting to Sh425.4 million were initiated but later cancelled without any justification.
In addition, supporting documents, including voided payment vouchers, requests to void payments, National Treasury approval and Exchequer requisitions from the Budget Controller, were not made available for audit.
Meru County cancelled 145 transactions amounting to Sh415.38 million despite processing the payments.
For Governor Muthomi Njuki's Tharaka Nithi, 615 payment transactions totalling Sh293.3 million were processed and voided during the year under review.
The report revealed that an analysis of system payments for Embu County government showed that 716 transactions worth Sh324.5 million were voided during the year under review.
However, management did not provide a reconciliation to confirm whether the voided transactions were subsequently paid.
Governor Susan Kihika's Nakuru voided 570 transactions amounting to Sh308 million without supporting approvals and justifications for the voided transactions.
