Members of Parliament have launched an investigation into the Ksh3.8 billion State Officers and Public Officers Motor Car Loan Scheme for alleged mismanagement and neglect.
MPs drawn from the National Assembly Special Funds Accounts Committee on Thursday, November 21, raised concerns about the purpose and effectiveness of the fund during a session with the fund CEO, Edna Atisa.
During the meeting convened to address pending audit queries, the lawmakers revealed that the fund, which was valued at Ksh3.8 billion, has only facilitated transactions worth Ksh641 million since its inception in 2015.
The fund was established to provide car loans to state officers in the executive and civil servants under the Public Service Commission.
Despite having a fund valued at Ksh3.8 billion, only a fraction has been used for its intended purpose, leaving Ksh3 billion sitting idle for years.
"The fund was dormant between 2015 and 2019, with Ksh3 billion sitting idle during that period," a report by the Auditor General as quoted by the legislators revealed.
According to an analysis of the audit report by the Committee chaired by Mbooni MP Kivasu Nzioka, there was an alleged accounting error where a car grant worth Ksh9.8 million was recorded in the wrong ledger.
The scheme's CEO, Atisa, attributed the delays in the fund’s operationalization challenges that resulted in the fund deciding to secure a financial institution to administer the scheme.
She further revealed that the fund at its inception lacked capacity and therefore staff from the National Treasury initially managed the fund.
The Committee, however, argued that the fund could manage loan processing internally. It argues that the scheme does not need a financial institution that charges a 1 per cent interest fee.
The CEO told the committee that currently, Ksh3.4 billion of the fund is invested with the Central Bank of Kenya, generating a profit of Ksh533 million through government securities an approach that was criticized by the committee.
“Does this Car Loan Scheme exist to provide car loans to state and public officers, or is your mandate to focus on investments while your clients are neglected?” Nzioka questioned the CEO during the meeting.
With the fund now primarily invested in government securities, generating profits instead of fulfilling its mandate, the Committee has directed the fund’s management to reappear for further investigation of financial records leading to 2024.
