The High Court has ordered the National Treasury to publicly account for every shilling flowing through the Sh5 trillion National Infrastructure Fund while allowing the government to continue implementing the programme as a legal challenge over its constitutionality proceeds.
Justice Patricia Nyaundi declined to suspend the National Infrastructure Fund (NIF), saying such an order would disrupt executive functions and projects already underway in the public interest. Instead, the court directed the Treasury to provide detailed financial records and continue reporting on the fund's activities until the case is heard and determined.
The judge found that the petition raises genuine constitutional questions on the law that created the fund but ruled that halting its operations at this stage would not be appropriate. She instead opted for measures aimed at ensuring accountability while preserving ongoing government functions.
The Treasury must file accounts certified by the Auditor-General within 30 days, or by August 24, detailing all money received since the fund became operational.
The records must include the dates deposits were made into accounts at the Central Bank of Kenya or commercial banks, together with every withdrawal, expenditure and allocation made from the fund.
The court also ordered the Treasury to continue filing reports on all transactions every three months from November 30 until the constitutional petition is concluded.
The government plans to inject about Sh20 billion from the planned initial public offering of Kenya Pipeline Company shares and another Sh244 billion from the sale of its stake in Safaricom as the fund's initial capital.
The National Infrastructure Fund was established to finance major development projects, including roads, irrigation schemes, power generation plants and the country's main airport, without increasing public debt.
Its legality has, however, been challenged over claims that there was no meaningful public participation before the law was enacted and that Parliament's oversight role has not been properly safeguarded. The petitioners also argue that proceeds from the sale of strategic State assets could be channelled into the fund outside the normal budget approval process.
"The issues raised touching on the constitutionality of the statutory framework, the scope of legislative authority and the alleged derogation from constitutional safeguards are neither frivolous nor insubstantial," she said.
"They present bona fide questions that properly fall within the court's mandate to interrogate the constitutionality of legislation."
The petition was filed by four Kenyans led by Nakuru-based consultant surgeon, Dr Magare Gikenyi Benjamin.
In their court filings, the petitioners argue: "A national public fund cannot be established under any other statutory regime, including as a limited liability company under the Companies Act."
They further contend that "Parliament must approve the establishment of a national public fund as well as ongoing oversight of the operations of such a fund."
The case also questions whether the fund complies with constitutional provisions governing the sharing of functions between the national and county governments, management of public finances, the oversight role of the Controller of Budget and Parliament's constitutional mandate.
The government opposed the request to suspend the fund, maintaining that the law establishing it is constitutional and that implementation has already begun.
The Act provides for an independent board to oversee the fund alongside a competitively recruited chief executive responsible for its day-to-day operations.
The Treasury recently advertised the chief executive position after Cabinet Secretary John Mbadi appointed six board members to serve three-year terms from July 8.
The government also informed the court that proceeds from the sale of its 65 per cent stake in Kenya Pipeline Company had already been deposited into the fund, while money from the planned sale of the State's 15 per cent stake in Safaricom is expected. It argued that interim court orders could not reverse actions that had already taken place.
Justice Nyaundi said the court was not expected to determine the constitutional issues at this stage but noted that allowing the fund to continue operating without safeguards could affect the outcome of the petition.
"The statutory scheme at issue contemplates ongoing and substantial financial transactions, some of which have already occurred and others that are imminent," said the court.
"If those processes continue unchecked while constitutional questions remain unresolved, the petitioners' challenge may be overtaken by events."
Even so, the judge ruled against suspending the law.
"The balance of convenience does not favour a blanket prohibition. Rather, it favours ensuring that any ongoing activities of the fund are conducted transparently within public view and subject to constitutional safeguards," the court said.