Auditor General Exposes 6 Govt Directors For Defaulting On Ksh 35M Loans
An investigation conducted by Auditor General Nancy Gathungu revealed that six directors at the Agricultural Finance Corporation (AFC) neglected to repay internal loans provided by their employer, totaling Ksh35 million.
According to the report analyzed by PoliticalPulseChat, it was observed that seven executives of the state-owned company had borrowed a total of Ksh54 million in the Fiscal Year concluding in June 2022.
Nevertheless, one director fulfilled the loan responsibilities while the other six defaulted.
Therefore, the Auditor General questioned why the agency hadn’t acted promptly to recover the loans, especially considering that there were securities in place for these loans.
The report highlighted that just Ksh5,955,000 has been returned concerning the credit arrangement provided to the directors.
“Further, the loan portfolio reflects Directors’ loans of Ksh54,927,000 which comprises seven (7) loan accounts out of which six of the loan accounts are in arrears amounting to Ksh35,829,353 and have all been referred to the debt recovery unit.
“A review of records revealed the six accounts have been graded as non-collectible even upon disposal of attached securities as per the existing credit policy. Although a provision of Ksh5,955,000 has been made on directors’ loans, this may be inadequate,” read the report in part.
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Additionally, Gathungu raised apprehensions about the condition of loans that were not yielding returns at the agency, especially as certain members of the agricultural organization had borrowed from it.
The report indicates that a total of Ksh9,892,054,000 was distributed among both the public and the board members.
However, a little more than Ksh3 billion still needs to be reimbursed to the state corporation.
“Only loan balances amounting to Ksh830,573,976 held in 2,457 accounts with arrears amounting to Ksh829,695,138 were transferred to the debt recovery unit for specialized attention during the year under review.
“This is almost double the maximum allowable standard of 15% by the prudential guidelines of the Association of African Development Finance Institutions, which the Corporation uses as specified in Chapter 7.1 of the Credit Policy,” read the report in part.
The government wholly owns AFC, which has the responsibility of providing loans to farmers throughout the nation.
Auditor General Exposes 6 Govt Directors For Defaulting On Ksh 35M Loans