Auditor General questions AFA’s Sh200 million payouts to cane farmers

The Agriculture and Food Authority is facing questions over questionable transactions involving more than Sh200 million meant for sugarcane farmers and salary arrears, with the Auditor-General warning that the money may have been lost due to duplicate payments and poor oversight.

In a report covering the financial year ending June 30, 2024, Auditor-General Nancy Gathungu said her review revealed cases where payments were made without proper documentation, as well as instances where the same beneficiaries may have been paid twice.

According to the audit, there was no evidence that funds intended for Chemelil, Muhoroni and Nzoia sugarcane farmers reached them.

At Chemelil Sugar Company, Sh140 million was reportedly paid to several saccos and other institutions, but there was no record proving that farmers received the money.

Despite Treasury’s directive that the funds be disbursed directly to farmers, Chemelil said it had no way of confirming whether each beneficiary got their share, and could not account for farmers who had died between the preparation of the payment list and the actual disbursement.

The report also questions a Sh13.5 million transaction, which could not be verified because the entity involved did not produce remittance documents from saccos to show that farmers received the funds.

At Nzoia Sugar Company, Sh63 million reportedly paid to farmers for arrears could not be confirmed.

While the company claimed the money was sent to various saccos, cooperatives and banks, no remittance records from the Nzoia Sacco Society were provided to auditors.

Another red flag was raised over Sh150 million paid for salary arrears covering February, March and April 2023 at Nzoia Sugar.

The schedule used by the Agriculture and Food Authority to make payments contained duplicate account numbers for different staff, leading to irregular double payments of Sh5 million to retirees, Sh20 million to casual workers and Sh17 million to permanent staff.

“The accuracy and regularity of the salary arrears could not be confirmed,” the report, which has been tabled in Parliament, states.

The Auditor-General also questioned a provision of Sh1.3 billion for harmonised salaries, noting that it was not backed by the necessary documentation, including an approved pay structure.

“Further, the management could not explain why they had to provide for such a huge amount without finalising the consultation with SRC,” the report reads.

The audit also found no interim management committee report, meeting minutes or current employment details of the affected staff, making it impossible to confirm whether they were still in service or had left.

Beyond the disputed payments, the report revealed that AFA could not account for over Sh11.2 billion in assets, including 17 parcels of land worth Sh6.6 billion that lacked ownership documents.

Some of the parcels had been illegally allocated to private developers.

Also flagged were idle cane testing units worth Sh1.4 billion, installed in 11 companies to measure sucrose content as a basis for paying farmers. The units have remained unused due to poor integration with sugar mills.

The audit further cited an irregular investment of Sh221 million in a fixed deposit account without Treasury approval, and at least 28 dormant bank accounts holding Sh13.1 million, raising more questions over the authority’s financial controls.