The Kenya School of Law (KSL) has come under intense scrutiny after an audit report revealed alarming financial discrepancies surrounding the construction of an ultra-modern library and moot court. This project, which began in June 2013, remains incomplete more than a decade later, raising serious questions about the management of public funds, accountability, and efficiency in the institution’s operations.
The audit, conducted by the Office of the Auditor-General, highlighted significant concerns about the expenditure incurred on the project, with KSL having already spent KSh 358.7 million. Despite this substantial amount of taxpayer money being poured into the project, the construction remains unfinished, long past its expected completion date of September 2016.
Delayed Completion and Lack of Accountability
The ultra-modern library and moot court project was initially awarded to a contractor for KSh 488.7 million, with a stipulated construction period of three years. The project commenced on June 24, 2013, and was expected to be completed by September 2016. However, seven years after the planned completion date, the project is still incomplete, prompting Auditor-General Nancy Gathungu to raise concerns about the value received for the expenditure incurred thus far.
A key finding of the audit was the failure by KSL management to provide crucial documentation for audit verification. According to Gathungu, there were no site inspection reports or meeting minutes between the contractor, KSL management, and the project manager. This lack of transparency and documentation raises concerns about the management of the project and whether proper oversight mechanisms were in place.
The auditor’s report emphasized the difficulty in ascertaining whether the school obtained economy and efficiency from the KSh 358.7 million spent on the project. In particular, the lack of proper justification for the delayed completion of the moot court further exacerbated concerns about the management of the project.
Questionable Payments of Damages
One of the most controversial aspects of the audit findings is the payment of liquidated damages to the contractor. The audit revealed that KSL paid KSh 7.2 million in liquidated damages to the contractor in June 2023, despite the fact that the project was significantly behind schedule. The damages were calculated at a rate of KSh 400,000 per week for 18 weeks, but the auditor questioned the logic behind paying damages to a contractor who had failed to complete the project on time.
“It was not clear why a project behind schedule is paid for liquidated damages instead of being penalized for delayed completion,” the audit report stated. This raises questions about the contract’s terms and the management’s approach to handling the contractor’s failure to meet deadlines. Normally, liquidated damages are meant to compensate for losses resulting from delayed completion, yet the contractor was paid for damages rather than facing penalties.
Furthermore, the audit report noted that despite the extension granted to the contractor, the project has still not been completed and handed over to the school. The audit cast doubt on whether the contractor and KSL had delivered the services they were expected to provide efficiently and effectively, especially given the protracted delays.
Failure to Submit Bank Reconciliation Statements
In addition to the issues surrounding the construction project, the audit flagged other areas of concern within KSL’s financial management. One notable issue was the failure of the school’s management to submit bank reconciliation statements for its accounts at Absa Bank, Equity Bank, and Cooperative Bank to the National Treasury. This is a violation of Regulation 90(1) of the Public Finance Management (National Government) Regulations, 2015, which mandates that accounting officers must provide statements for all accounts they operate.
This lack of compliance with basic financial management practices highlights a concerning disregard for financial accountability within the institution. By failing to submit these crucial documents, KSL management was in clear breach of the law, further eroding trust in the school’s ability to manage public funds responsibly.
Irregular Renewal of Medical Insurance
Another area of the audit that raised red flags was the irregular renewal of medical insurance for KSL staff. The school spent KSh 23 million on medical insurance, but the renewal process appeared to violate constitutional principles of fairness, equity, and transparency. The original advertisement for the insurance services indicated that the contract was for one year, from July 1, 2021, to June 30, 2022. However, the contract contained a clause allowing for a one-year renewal, subject to satisfactory performance.
The audit report criticized the renewal of the insurance contract for the 2022/2023 financial year, arguing that it contravened Article 227 of the Constitution, which mandates that procurement processes must be fair, equitable, transparent, competitive, and cost-effective. By renewing the contract without going through a competitive bidding process, KSL management breached procurement laws designed to safeguard public resources from misuse.
Board of Directors’ Excessive Meetings
The audit also placed KSL’s board of directors under the spotlight for holding an excessive number of meetings during the year under review. Government regulations limit the number of board meetings to a maximum of six per financial year. However, the audit revealed that the KSL board held a staggering 30 meetings, including both ordinary and special board meetings, during the 2022/2023 financial year.
The audit report noted that the board held these meetings without obtaining the necessary approval from the relevant Cabinet Secretary, as required by government regulations. The excessive number of meetings not only contravened government directives but also raised concerns about the misuse of public funds to finance unnecessary gatherings.
“The meetings were held contrary to Circular no. REF: OP/CAB.9/1A dated March 11, 2020, part A on board meetings (2) and (3) which states for avoidance of doubt, the board meetings shall be restricted to a minimum of four and capped at a maximum of six for each financial year,” the auditor said.
Unresolved Past Audit Queries
The audit further criticized KSL management for failing to address past audit queries and recommendations. Despite previous audits flagging issues within the institution, there has been little to no action taken to resolve these matters. This lack of responsiveness to audit findings reflects poorly on KSL’s commitment to improving its financial management and governance practices.
One of the key unresolved issues is KSL’s failure to remit value-added tax (VAT) amounting to KSh 26 million. Section 44(1) of the Value Added Tax Act, 2013, requires VAT to be paid no later than the 20th day after the end of the period. By failing to remit these taxes, KSL once again found itself in breach of the law.
Implications for Public Confidence
The findings of this audit have significant implications for public confidence in the Kenya School of Law, which plays a crucial role in shaping the legal professionals of the future. The institution’s inability to complete a key infrastructure project, coupled with its questionable financial practices, raises concerns about its governance and oversight.
At a time when the Kenyan government is striving to enhance transparency and accountability in public institutions, the KSL audit presents a troubling example of how public funds can be mismanaged. The issues highlighted in the audit, including delayed projects, dubious payments, irregular procurements, and excessive board meetings, paint a picture of an institution in need of urgent reform.
Moving forward, the management of the Kenya School of Law must prioritize addressing the audit’s findings and implementing measures to ensure greater accountability and efficiency. This will not only restore public trust but also ensure that the institution can effectively fulfill its mandate of training and developing Kenya’s future legal professionals.
Conclusion
The audit of the Kenya School of Law exposes significant lapses in the management of public funds and raises questions about the institution’s governance. The delays in completing the library and moot court project, coupled with questionable financial practices, call for immediate action to improve transparency and accountability within KSL. Only by addressing these issues can KSL rebuild public confidence and ensure that it fulfills its role as a premier legal training institution in Kenya.
