Treasury Clarifies Sh1.3 Trillion Irregular Exchequer Withdrawals
The Treasury has vehemently denied claims of irregularities regarding Exchequer withdrawals amounting to Sh1.3 trillion, assuring the public that all procedures followed in the withdrawal process were fully compliant with legal and financial regulations. The controversy arose from recent media reports that suggested both the National and County governments made improper withdrawals from the Central Bank of Kenya, totaling the colossal sum in just seven months.
In a response issued by the Principal Secretary, Chris Kiptoo, the Treasury clarified the facts, emphasizing that despite the lack of automation by the end of the 2023/2024 financial year, the manual withdrawal process adhered to rigorous oversight measures. According to Kiptoo, the withdrawal requests and processes followed strict approval mechanisms from the Controller of Budget, ensuring full compliance with public finance laws.
The Treasury’s quick and firm response was aimed at dispelling doubts about the integrity of its financial processes. It acknowledged that the media’s scrutiny played a key role in raising questions but insisted that the claims made in the report were inaccurate. The public was reassured that the system, although manually operated, was still fully supervised, with every transaction thoroughly reviewed to ensure that the funds were spent as intended.
Background to the Controversy
Reports from local media had raised concerns over the irregularity of these withdrawals, claiming that a significant portion of the Sh1.3 trillion was diverted from the Central Bank without going through proper checks. According to the article, the funds were primarily used to pay debts, pensions, and other essential expenditures, but the withdrawal process lacked adequate automation and oversight.
The allegations were that the manual withdrawal process allowed for the bypassing of certain financial checks, thus possibly opening up avenues for misuse of funds. However, the Treasury firmly rejected these allegations and stated that each of the withdrawals followed the correct legal procedures.
In his statement, PS Kiptoo explained that the process of making exchequer requests was not fully automated at the time, and therefore, the government had to process these withdrawals manually. This manual approach was a result of an ongoing reform project to automate the exchequer system, which is currently being implemented. However, Kiptoo reassured the public that each withdrawal was still subject to careful scrutiny by the Controller of Budget to ensure financial transparency and prevent misuse of public funds.
He further explained that the manual withdrawal process was not a failure but rather an intermediary stage until the new automated system was fully in place. The Treasury, he added, had been actively working on modernizing the exchequer process, and the successful completion of this project would allow for a more efficient and transparent way to handle the funds in the future.
Treasury’s Response to the Allegations
In his statement, Kiptoo firmly stated that the National Treasury had not lost any funds nor was there any instance of misappropriation in the process. He confirmed that all financial transactions were processed with strict legal and financial oversight, including the approval of the Controller of Budget. While the automation of the exchequer system was still underway, the Treasury made it clear that no public funds were at risk.
“The Treasury categorically affirms that all Exchequer withdrawals, whether processed manually or electronically, are subject to strict legal and financial oversight, with the Controller of Budget ensuring full compliance with public finance regulations. At no point has public money been lost or misappropriated through this process,” Kiptoo said. This assurance was aimed at quelling public concerns raised by the media reports, which questioned the integrity of the government’s financial processes.
The National Treasury further detailed that the claims made by the media, which alleged that the government bypassed the automated system for its withdrawals, were simply not accurate. The Treasury maintained that all procedures were followed according to the existing regulations and that no shortcuts were taken to expedite the process. All withdrawals had been thoroughly reviewed and authorized by the Controller of Budget, ensuring that the funds were being used for their intended purposes.
Efforts to Automate the Exchequer System
The Treasury outlined its efforts to automate the exchequer process as part of a reform initiative launched in collaboration with the Central Bank of Kenya (CBK) and the Controller of Budget. The initiative, which began last year, aims to streamline the withdrawal process, making it more efficient and transparent. The automation will ensure that all exchequer requests are processed digitally, eliminating the need for manual intervention.
By automating the exchequer process, the Treasury is looking to improve the accuracy of the system and enhance its ability to handle large financial transactions without relying on human oversight. With the new automated system, the government aims to ensure that every transaction is tracked and that the necessary approvals are obtained digitally, making the process faster and more reliable.
As part of the initiative, the automation system has already been successfully integrated into the national government’s Ministries, Departments, and Agencies (MDAs). The Controller of Budget now approves all exchequer requests digitally, ensuring that the process is more secure and less prone to human error or manipulation. However, the Treasury pointed out that certain transactions, such as debt payments, transfers to counties, and other specific funds like the Judiciary and Equalization Fund, were not included in the first phase of automation.
The exclusion of certain transactions from the initial phase of automation was intentional, as these specific types of payments required a different approval mechanism. The Treasury made it clear that these exclusions were not an indication of irregularities but rather a necessary measure to ensure that the right procedures were in place for each category of expenditure.
Timeline for Full Automation
The full integration of the exchequer system into the automated platform is expected to be completed by the end of the 2024/2025 financial year. This will encompass all transactions, including debt payments, which were previously handled outside of the automated system. The Treasury expects that with this full transition, the process will become even more efficient and transparent, reducing the risk of fraud or mismanagement of public funds.
PS Kiptoo emphasized that the full integration of the system will bring about several benefits, such as faster processing times and a more secure means of tracking withdrawals. Additionally, the full automation will also reduce the possibility of errors and discrepancies in the withdrawal process. By the end of the integration, all transactions, including those previously excluded, will be processed through the automated platform.
The Treasury stressed that the move toward full automation was a necessary step in modernizing the public financial management system. With the completion of the project, Kenya will join a growing number of countries that have adopted automated systems to streamline government financial processes, making them more efficient and transparent.
Clarification on Financial Oversight
One of the central issues raised in the reports was the claim that the manual withdrawal process bypassed proper oversight. The Treasury’s clarification has sought to address these concerns by emphasizing the role of the Controller of Budget in overseeing all withdrawals. Despite the manual nature of the process, all requests and payments went through the necessary approval channels to ensure they were legitimate and necessary for the government’s financial obligations.
PS Kiptoo also assured the public that the Controller of Budget’s role in the oversight process had not been diminished by the manual approach. The oversight mechanisms remained intact, ensuring that no funds were misused. He pointed out that despite the automation process not being fully implemented, the legal frameworks for financial oversight remained fully functional, and all financial transactions were subject to thorough scrutiny.
The Treasury also noted that the automation of the system, once completed, would make the process even more transparent. Digital approval processes would ensure that every transaction was logged and monitored in real-time, providing a more robust system of oversight that would allow for quicker identification of any discrepancies or issues.
Public Reassurance from the Treasury
The Treasury has made it clear that it is committed to maintaining transparency in its financial dealings. The recent controversy surrounding the Sh1.3 trillion withdrawals has prompted a closer look at how government finances are managed. In response, the Treasury has reassured the public that all withdrawals, irrespective of whether they were processed manually or electronically, have been carried out with strict adherence to legal and financial regulations.
PS Kiptoo emphasized that the government’s commitment to improving its financial systems remains strong, and the reforms aimed at automating the exchequer process are part of a broader strategy to enhance governance and accountability. With the completion of the automation project, the Treasury aims to further strengthen the oversight mechanisms and ensure that public funds are used efficiently and transparently.
The public reassurance from the Treasury also extends to the media, which was instrumental in highlighting potential issues with the withdrawal process. The Treasury acknowledged that while the media’s scrutiny was important for ensuring accountability, it was equally important that such reports were based on accurate information. Misleading or inaccurate reports, the Treasury cautioned, could undermine public trust in the financial management system.
Media’s Role in Financial Accountability
The role of the media in bringing issues of public financial management to light is crucial in ensuring that government actions are held accountable. The media’s report on the Sh1.3 trillion irregular withdrawals sparked a public debate on the efficiency and transparency of government financial systems. While the media’s scrutiny is important for holding the government accountable, it is equally important to ensure that the information presented is accurate and reflects the true nature of government actions.
The Treasury has acknowledged the role of the media in highlighting potential issues but has also called for responsible reporting that does not mislead the public or cause unnecessary panic. By providing accurate and timely information, the Treasury aims to foster a better understanding of how government finances are managed and how the reforms currently underway will improve the process in the long term.
The government also encourages the media to continue playing an active role in financial oversight, but with an emphasis on verifying facts and presenting a balanced view of the situation. This collaborative approach can help ensure that the public remains informed and that government actions are transparent and accountable.
Conclusion: Treasury’s Commitment to Financial Integrity
In conclusion, the Treasury’s response to the controversy surrounding the Sh1.3 trillion exchequer withdrawals has highlighted the ongoing efforts to improve the management of public funds. Despite the manual process used for withdrawals in the past, the Treasury assures the public that all transactions were conducted in full compliance with financial regulations and oversight. With the ongoing automation of the exchequer system, the Treasury aims to further strengthen the efficiency, transparency, and accountability of public financial management.
By implementing these reforms, the Treasury hopes to provide a more secure and reliable system for managing public funds, which will ultimately benefit the citizens of Kenya. The full integration of the automation system by 2024/2025 will mark a significant milestone in the government’s efforts to improve financial oversight and ensure that taxpayers’ money is used responsibly. The Treasury’s commitment to maintaining transparency and accountability in its financial dealings remains unwavering, and it continues to work towards a more efficient and effective public financial management system.
