Kenya: Sh9 Billion to Be Lost If Food Fund is Disbanded - CEO

12 September 2020

In June 9, 2020, when a court suspended the intended dissolution of the Strategic Food Reserve Trust Fund (SFRTF), its employees sighed with relief.

But that respite lasted just two weeks before chief executive Omar Haji Salat and the staff found themselves without an office and a number of documents were carted away by representatives of the government.

According to an affidavit by Mr Salat, on July 22, 2020, the Secretary of the Presidential Delivery Unit, Mr Andrew Wakahiu, arrived at the fund's offices in the company of an acting Superintendent of the Administration Police one Boniface Ngugi and a contingent of Administration Police officers who broke into the offices on 20th floor in Teleposta Towers.

"The two replaced the office locks, locked the offices and left with the keys paralysing the operations of the fund," the CEO says.

The SFRTF is mandated to ensure strategic food reserves in the country by ensuring stability of food supplies and prices and mobilising funds to support related activities.

The falling-out in government has opened the floodgates of accusations, with the CEO feeling besieged, operating without a board and accusing Ministry of Agriculture officials of defrauding the fund.

In an affidavit accompanying Petition No. 145 of 2020 by activist Okiya Omtatah, the CEO accuses Agriculture Cabinet Secretary Peter Munya of "unlawful and fraudulent" sale of 124,486 bags (approximately 6,224,300 kilogrammes) of condemned maize worth Sh200 million to a cement factory in Nakuru town.

He says this was "in contemptuous disregard of the Public Procurement and Asset Disposal Act No. 33 of 2015 and the recommendations by the fund's Oversight Board, through a board resolution, that the maize should be competitively sold for use as energy to interested parties."

"The sales proceeds worth Sh200 million were not surrendered to the Treasury as extra exchequer receipts" says Mr Salat.

Disbanding

In March, the Cabinet directed that SFRTF be wound up within six months. To wind up the fund, Section 24(8) of the Public Finance Management Act, 2012 provides that the Treasury Cabinet Secretary must get the approval of the National Assembly

But on April 14, National Treasury Cabinet Secretary Ukur Yatani published in the Kenya Gazette a notice of revocation of the Public Finance Management (Strategic Food Reserve Trust Fund) Regulations, 2015.

The fund was set up by these regulations and the revocation of the same meant the fund ceased to exist.

But the revocation of the regulations were challenged in court by Mr Omtatah and the court on June 9 suspended the Public Finance Management (Strategic Food Reserve Trust Fund Revocation) Regulations, 2020, meaning the SFRTF was to continue with its operations.

But Mr Salat's affidavit shows that the government is in a hurry to have the fund disbanded.

There are reports that the government wants to take the functions of SFRTF back to the National Cereals and Produce Board. Besides the allegations against Mr Munya, Mr Salat claims that senior officials in the Agriculture ministry have been misappropriating SFRTF finances.

"I am deeply troubled that this unlawful action (the raid on the fund's offices) may lead to removal/tampering with the fund's documents and records. My fears are reasonable since I am aware that the following events led to disagreement between the fund's Oversight Board and the Ministry of Agriculture, Livestock, Fisheries and Cooperatives," he says.

He cites alleged misappropriation of the fund's resources in 2017/2018, which led to the criminal prosecution of senior NCPB and ministry officials, including then principal secretary Richard Lesiyampe.

He also accuses the ministry officials of "unlawful and fraudulent withdrawal of Sh1.8 billion from the fund's bank account."

The matter, he states, is under investigation by the Ethics and Anti-Corruption Commission (EACC) .

The CEO also alleges that the advance payment of Sh4.8 billion to the NCPB, which is the fund's agent, has yet to be accounted for.

He adds that the 2017/2018 maize sale proceeds of Sh1.5 billion and Sh823 million in 2018/2019 are yet to be paid to the fund.

According to Mr Salat, the public risks losing up to Sh9 billion if the fund is abolished.

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