New Kenya Planters Co-operative Union (New KPCU) is under scrutiny after an audit of its 2023-2024 financial statements flagged more than Sh208 million in long-outstanding receivables whose recovery could not be confirmed.
Appearing before the Emmanuel Wangwe-led National Assembly Public Investments Committee on Social Services Administration and Agriculture, it was revealed that the state corporation is yet to recover a Sh100 million loan issued to the Pyrethrum Processing Company of Kenya in April 2022.
The Auditor General raised a red alert, telling the legislators that the loan, authorized through a letter by the Cabinet Secretary for Agriculture at the time, lacked mandatory documentation.
"Further, despite several follow-ups from New KPCU, no evidence of responses or commitment for repayment was provided for audit. In these circumstances, the recoverability of Sh100,000,000 from Pyrethrum Processing Company of Kenya could not be confirmed,’’ the auditor's report read.
In his response to the MPs, Timothy Mirugi, the Managing Director (MD) of the New Kenya Planters Cooperative Union (New KPCU), stated that letters and demand letters to recover the lost funds have fallen flat.
''Management has been following up on this by issuing demand letters to the institution. Further, we have written and requested a payment plan for the outstanding debt, and now the management, through the board, is planning to engage the National Treasury on other avenues of recovering the money,’’ Mirugi said.
The audit also firmly flagged trade and other receivables amounting to Sh108.8 million, including Sh. 94 million that has been outstanding for more than a year.
The audit was never furnished with evidence to substantiate the responses, further raising huge doubts about internal controls and the outstanding balances.
''The statement of financial position reflects the trade and other receivables balance of Kshs. 108,817,486 as disclosed in Note 27(a) to the financial statements. The balance includes Kshs 94,090,905, which are receivables over one year old, and demand letters were not provided for verification. Further, the union did not have a debt management policy, and there was no evidence of circularization,’’ it further reads.
The audit report also added, “In the circumstances, the validity, accuracy, and recoverability of the trade receivables balance of Kshs 108,817,486 could not be confirmed.”
The audit further poked holes in the entity, exposing significant gaps in financial accountability at the state-backed institution, with over Sh. 1 billion in unresolved liabilities, unverified asset ownership, and incomplete liquidation procedures raise an alarm.
The OAG reported that, "it was not clear why the New KPCU has not disclosed liquidation claims of Kshs 1,044,405,448 outstanding to date under the year under review. Further, the New KPCU did not provide liquidation statements for verification. In this circumstance, the ability of the union to repay the funds of the Coffee Cherry Advance Revolving Fund (CCARF) could not be confirmed.’’
The renewed scrutiny continues as the OAG revealed the violations in staff management and ethnic imbalance in employment.
According to the audit findings and the report tabled, the institution illegally retained at least five employees beyond the mandatory retirement age of 60, without offering any justification to auditors.
The OAG report read, “Review of the payroll and human resource records revealed that the Union had engaged five (5) staff members beyond the mandatory retirement age of 60 years.”
"No evidence was provided to justify why the union continued to engage staff past their retirement age. In the circumstances, management was in breach of the law,’’ read the auditor's report.
