The Public Accounts Committee (PAC) on Tuesday raised serious concerns over billions of shillings advanced to Kenya Airways, the controversial purchase of Telkom Kenya shares, and avoidable expenditure resulting from delayed court payments, during a session scrutinising the National Treasury’s audit for the financial year ending June 2024.
The session, chaired by PAC Vice Chairperson and Garissa County Woman Representative Amina Udgoon Siyad, examined Auditor-General findings pointing to potential loss of public funds, unapproved spending, and breaches of financial management laws.
“We are dealing with very serious questions of accountability,” Siyad told Treasury officials. “These are significant sums of public money, and Kenyans deserve clear answers on where their taxes are going.”
According to the audit, the Treasury transferred Ksh 10 billion to Kenya Airways in 2022/2023 as an on-lent loan, increasing the airline’s total loan exposure to Ksh 41.27 billion disbursed between 2019 and 2022. Lawmakers were alarmed to learn that the loans were issued before formal agreements were signed.
“It is unacceptable that billions were released without signed agreements,” Siyad said. “How does the Treasury justify lending public money informally?”
The audit further revealed that accrued interest and penalties had raised the total loan to Ksh 43.048 billion by December 2022. Additionally, the Government paid Ksh 12.326 billion on behalf of Kenya Airways to settle a defaulted foreign loan, including Ksh 7.8 billion under Article 223, with no repayment plan, security, or formal agreements in place.
The Auditor-General warned that the recoverability of Ksh 55.37 billion owed by Kenya Airways could not be confirmed.
PAC also questioned the Treasury’s Ksh 6.196 billion expenditure to acquire a 60% stake in Telkom Kenya, which was carried out under Article 223. While the Treasury later sought parliamentary approval, MPs noted that the National Assembly never formally approved the spending, a clear breach of law.
“Parliament’s approval is not optional. Without it, the transaction remains irregular,” the Auditor-General told the Committee.
The audit also exposed wasteful spending linked to delayed contractor payments, resulting in Ksh 97.27 million in interest and legal fees. The Ministry had acknowledged owing Ksh 235.6 million, but failure to settle the debt led to a court award of Ksh 327.19 million.
“This is a classic case of negligence,” Siyad said. “Taxpayers should not bear the burden of interest and legal fees that could have been avoided with timely action.”
PAC has directed Treasury officials to produce all relevant documentation, including loan agreements, repayment frameworks, and justifications for invoking Article 223. Siyad warned that if the paperwork does not exist, responsibility must be taken.
