The National Youth Service (NYS) was instituted in 1964 by the National Government of Kenya to equip young Kenyans with essential and formative skills in both personal and national issues (NYS, 2018). Until the late 1980’s, all students were required to join the NYS before joining Universities for further studies; however, this requirement was dropped after the aforementioned period and membership to the NYS became voluntary (NYS, 2018).
Following the election of Uhuru Kenyatta as president of the republic of Kenya in 2013, and in furtherance to his campaign pledge to reduce the levels of high youth unemployment, NYS was rebranded in 2013 and later launched in 2014 by his Government. The goal of the reinvigorated NYS was to cast a wider net to all communities, so as to equip the youth with basic paramilitary skills and to give them an option to the join the Kenya Defence Forces (KDF) or an avenue to further their training in tertiary institutions. (NYS, 2018)
Despite the well-intended purposes of the NYS rebirth; the institution has recently come to the national limelight for the wrong reasons on two different occasions and attributable to two different scandals, albeit cast on the same script. This paper describes the two scandals whilst evaluating the the laws, policies and the procedures that were not adhered to. Notably, the first scandal took place in 2015 and is commonly dubbed as ‘NYS 1’ by the media and public; this has since been dwarfed by an even bigger scandal in 2018 dubbed as ‘NYS 2’.
The quantum of financial loss arising from financial impropriety at NYS 1 varies depending on which official was questioned or the Newspaper reporting. However, most sources, including prosecution seem to amalgamate at a figure of KES 791,000,000 (read seven hundred and nine one million Kenya shillings).
Regrettably, three years later on, and following the acquittal of the NYS 1 suspects on 9th March 2018; the particulars of what transpired at NYS still remain shrouded in mystery and opaqueness. While there is no doubt whatsoever that hundreds of millions were siphoned out of NYS, the linkage between the loss of money and the perpetuators has remained illusionary. As an example, the key suspect, the former permanent secretary at NYS, Ms Anne Waiguru alleged to be the key whistle blower to the scam. The description of the scandal below is based on the version given by prosecution, and limited by the fact that they were not able to secure a conviction.
The architecture of the NYS scandal involved collusion between insiders and suppliers whereby funds were transferred to pay for non-existent supplies or the prices inflated. As an example, it is alleged that NYS procured 18 male and female condom dispensers at a cost of Kshs 450,000 translating to Kshs 25,000 each, while on average, such dispensers should cost Kshs 8,900 – hence inflated by 180%. A tabulation of other such instances is as highlighted below;
In addition to the above list, NYS purchased a piano of Yamaha brand at a cost of Kshs 235,900 of which its utility could not be established. Other than inflating the cost of purchases, fraud was also perpetuated by adding zeros on all transactions as quoted below;
“police investigations established that the entries for payment through the government’s IFMIS system were manipulated by introducing zeroes on all the transactions, resulting in the theft of 712 million shillings” (Citizen, 2015).
The Director of Criminal Investigations (DCI) found the former senior Deputy Director General, Mr. Adan Harakhe most culpable for the offence cited above, as his password was used to authorize the payments (Daily Nation, 2015). However, in his defence Mr. Adan Harakhe alleged that password had been stolen and therefore the payments had been authorised without his authority or knowledge (Daily Nation, 2015).
Another revelation that caught the nation’s attention was how a former hairdresser, Ms Josphene Kabura, was allowed by banks to withdraw large wads of money in cash. It is alleged that Ms Josphene Kabura accounts received colossal amounts of money, of which the money was disbursed to other accounts shortly after being credited. To date, Ms Josphene Kabura, is charged with laundering Kshs 1.6 Billions using her accounts at family bank (Daily Nation, 2018). Separately, eight senior bank managers were charged with failure to raise an alarm with the authorities in regards to the suspicions transactions perpetuated by Ms Josphene Kabura (Daily Nation, 2018).
NYS 2 was more brazen while compared to NYS 1 as the amounts of money alleged to have been lost overshadow Ksh 791 reported for the former – a staggering Kshs 9 Billion Kshs (Daily Nation, 2018). The NYS 2 scandal has recently come to light, in May 2018. The case is currently in court and with over 40 suspects having been charged and most released on bond, pending the hearing and determination (Daily Nation, 2018). However, the overarching allegations and the architecture of the fraud borrows a leaf from NYS 1 – procured items were inflated and money was paid out to goods that had not ordered and/or delivered. As an example, a firm was paid for supplied 200 towels at a cost of Kshs 100,000 per towel. Another firm was paid Kshs 100 million Kshs for supplying just 100 car tyres translating to Kshs 1 M per tyre. Another firm received Kshs 40 Million for having supplied 3,000 blankets translating to Kshs 13,000 per piece. It was alleged that other firms were paid for having supplied nothing as was the case for Ms Ngirita firm (Daily Nation, 2018). Also, in total disregard
of the banking rules, individuals were allowed to withdraw huge amounts of money, whereby some individuals were able to withdraw Kshs 200 M in cash (Kenyans Online, 2018).
Laws, Procedures and Policies not adhered to
Several laws, procedures and policies were not adhered to by both employees of NYS, suppliers and the banks. For a start, public officers are meant to act with integrity as stipulated by the Leadership and Integrity Act No. 19 of 2012 (Kenya Law, 2018).
Government procurement is usually guided by Public Procurement and Disposal Act of 2015 and revised in 2018. NYS breached this act in paying for goods that were not supplied or procured. Also, the act was breached in the sense that most of the items surpassed the median estimate and/or that no competitive sourcing was done.
The banks on the other hand breached the Proceeds of Crime and Money Laundering Act of 2012 by failure to report suspicious transactions to the authorities as required. Also, by allowing individuals to withdraw huge sums of cash was in contravention of the banking rules.
In conclusion, the two scandals were perpetuated by way of collusion and in stark contrast of the rules they are supposed to abide by as listed above.