The national government on Friday rejected a Ksh443 million deal signed between Isiolo County Government and a foreign NGO.
Treasury CS Henry Rotich argued that the agreement between Governor Mohamed Kuti's administration and Living Goods Limited contravened the law.
Rotich was concerned that the agreement's regulations imply that money from the donor does not form part of Isiolo County's annual budget, which is against the Public Finance Management Act.
The regulations state that the fund management committee shall approve the expenditure.
However, according to the constitution, the mandate to approve the use of all public funds of a devolved unit are vested in the County Assembly.
The rejected deal had sparked a dispute between Governor Kuti and Isiolo Senator Fatuma Dullo.
The Senator had even sort for the intervention of Treasury in writing.
Fatuma claimed the deal was negotiated without the requisite public participation as well as the necessary clearance from the Ministry of Health and the Senate.
The deal involved a situational analysis of existing healthcare infrastructure and training community health extension workers on key health interventions.
In addition, the NGO was to support the county government with forecasting for the procurement of essential medicines and supplies.
