The Managing Trustee of the National Social Security Fund (NSSF), David Koros, found himself in the hot seat on September 7, as he appeared before the Public Investments Committee on Social Services Administration and Agriculture regarding discrepancies in the fund’s cash books as discovered by the office of the Auditor-General for the year ending June 2021.
The committee chaired by Vice Chairperson Caleb Amisi addressed several issues during the hearing including the Investments income totaling Ksh21 billion which included interest on corporate bonds amounting to Ksh124 million, recorded in the Fund's financial statements.
However, a notable omission that raised concerns was the interest income of Ksh16,624,953 earned from corporate bonds, which had not been recorded in the cash books. The Committee sought clarification on this discrepancy.
In response to this matter, Koros explained to the Committee that the funds had been invested in the East African Breweries Limited (EABL) medium-term note. This corporate bond was issued in April 2017 at an interest rate of 14.7%, with an expected maturity date of March 2022.
"Chair, unexpectedly, EABL redeemed the bond on 14th June 2021, earlier than expected, and credited the principal amount and interest accrued to the fund on 28th June 2021. There was an early redemption notice to all investors. We got the full value of the bond and reported it in the financial statements of the year ended June 2021. All this information was provided to the auditors during audit,” Koros elaborated.
Following this explanation, the Committee Chair, Saboti MP, Amisi ruled that Koros should provide the Committee with copies of the agreements related to the said bond.
Another issue brought to light during the hearing pertained to rental income debtors totaling Ksh541 million which had remained outstanding and unresolved for over two years.
According to the Auditor-General, NSSF had failed to explain why these rent arrears had yet to be cleared or written off as bad debts.
Koros defended this delay attributing it to the Covid-19 pandemic, a statement that did not bode well with the committee, with Nandi Hills MP Kibor Benard Kitur questioning whether the fund was using the pandemic as an excuse to misappropriate public funds.
"Chair, it is in public domain that Covid-19 came later than 2018. Does it mean NSSF is hiding under Covid-19 to steal public funds,” Kitur asked.
Nonetheless, NSSF’s Koros stood his ground pointing out that tenants across various government institutions had similarly used the Covid-19 pandemic as a reason for non-payment of debts.
The hearing came to a conclusion with the committee directing Koros to present documents supporting the submissions made.
