Nairobi Star (Nairobi)
Andrew Teyie
24 November 2008
Nairobi — Concern over the government budget deficit is likely to intensify with the news that the Judiciary appears to be financially strapped and is not meeting all its obligations.
The parlous state of the Judiciary finances came to light after several bond refund cheques issued by the judiciary on its Central Bank account number 010101026 bounced.
The cheques were released in October and November bounced because the account did not have funds.
The banks returned the rejected cheques with the following comments attached: "We advise that the attached cheques have been returned with the reason that the account does not have funds."
Last week many angry people went to the Nairobi Law courts demanding to know why their cheques bounced. However, officials just stonewalled and promised to issue counter cheques.
The identities of the recipients of the bounced cheques and their amounts have been kept confidential by the Nairobi Star.
When a cheque bounces, your banker charges Sh 5,000 each to the drawer.
Apparently, the Judiciary's lean period started in October.
"It is true that the Judiciary has been going through a lean financial period. It is also true that some cheques have bounced and so activities have been suspended," stated a source at the judiciary.
The source noted that frequency of the bounced cheques increased in October.
He blamed it on overtime paid to registry staff for sorting out appeal files.
"Since the payments started, cheques have been bouncing on a regular basis,", he said.
The staff who organize the files from all over the country are paid Sh 1,000 each every weekend. The payments have been suspended until January.
The judiciary has since issued a circular to staff suspending the overtime payments to next year.
Also suspended are the payments being made to the staff who used to proof-read records from the Court of Appeal and records emanating from the magistrate's courts.
"The explanation given to staff is that the judiciary account has no money", stated the source at the judiciary's accounts office.
"It is a disaster for the judicial system because people won't want to stand surety and the bail system will collapse," Mars Group executive director Mwalimu Mati said yesterday.
Mati narrated his own personal experience when he was compelled to pay Sh40,000 in cash two Fridays ago at the Kibera Law Courts.
Mati paid the money to bail out two activists arrested for distributing pamphlets critical of the decision by MPs not to have their salaries and allowances taxed.
In the Budget for the 2008/2009 financial year, the Judiciary was allocated Sh 1.5 billion.
The recurrent expenditure estimates show that the funds are for salaries and expenses of running the judicial services, including the Court of Appeal, the High Courts, magistrates and Kadhi courts. Their additional appropriation in aid is Sh 531 million as their total gross expenditure runs to Sh 1.9 billion.
There is mounting concern in Kenya over the size of the government deficit. The 2008/9 project a Budget deficit of Sh 127 billion to be met by Sh36 billion from the sovereign Eurobond, Sh10 billion from the sale of shares in National Bank of Kenya or Consolidated Bank, and Sh18 billion from local bonds not including the new infrastructure bonds.
But the Eurobond cannot happen because of the global financial crisis. The poor take-up of the Cooperative Bank sale makes further IPOs unadvisable for the time being. Tax receipts at Kenya Revenue Authority are below target. The donors will not help until the Waki report is resolved. And large-scale local bond issues risks forcing up commercial interest rates to a level that could seriously slow down economic growth.
Government is in a serious financial squeeze and there is no obvious way out of it.
Efforts to get comments from Finance ministry officials were unsuccessful.
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