. which is geared towards the alleviation of poverty and promotion of local development. of which there are 210 in the country. Prior to the establishment of CDF the constituency was solely a unit of political representation in Kenya. incomplete projects. patronage due to excessive powers of the MP.0 Background The Constituency Development Fund (CDF) is one of the devolved funds in Kenya. We urge quick action from the Board. These and other critical challenges facing the fund spurred the Minister of Planning. CDF contributes over 10% to all development in Kenya. The taskforce was established in June 2009 and our sources indicate that it hopes to present its findings to the Minister before the end of this month. December 2009 Alarm over illegalities in CDF operations Prepared by The Institute for Social Accountability (TISA) 1. We await the publishing of this report and hope that it will address the fundamental flaws in the fund’s design. 60 billion has been channelled through CDF since its inception. a lack of technical capacity. Parliament and the Ministry of Planning. National Development and Vision 2030 to establish a taskforce to review the fund. TISA seeks to evaluate the impact of the 2007 Amendments. Almost Kshs. We also wish to draw attention to some critical failures in the fund’s operations. The publishing of the findings of the CDF taskforce is timely as it coincides with the ongoing constitution review process both of which will feed into the long term strengthening of Kenya’s presently weak over centralized and ad hoc decentralization framework. National Development and Vision 2030 in addressing these.5% of government revenue will be allocated to the fund.GROSS ILLEGALITIES IN CONSTITUENCY DEVELOPMENT FUND NEED URGENT REDRESS Public Interest at stake due to poor performance of CDF national officers The CDF Status Report. In preparing this report. CDF provides that at least 2. poor planning and a litany of other weaknesses which threaten to undermine the very success of the fund. some of which render some CDF operations illegal. The implementation of CDF has been marred by repeated accusation of abuse of funds.

(c) A summary of the status of disbursements from the Treasury to the National Account. Without them CDF committees can eat to their hearts’ content. Section 28 of the Amended Act removed this provision and now allows the approval of projects on a monthly basis. . Section 28 provides that the Board will submit the following reports to parliament on a monthly basis. (a) A summary of the project proposals received from the constituencies in the preceding month and indicating the approval status of such projects.cdf. The lists were to include projects and their cost estimates. 2007. did away with printed estimates allowing parliament to draw funds from the consolidated fund in contravention of section 100 (1) of the Constitution of Kenya and needs to be redressed. Failure by Board to Publish project lists and progress reports contravenes CDF Act Under the 2003 Act. a visit to the Board website (www. Our repeated requests to the Board have also failed to realise the required information.go.Identified Problems and contradictions I. These reports enable constituents’ track which projects have been funded and the status of expenditure to those projects. However. No CDF project lists and updates for the last 2 years Despite the legal provision. At constituency level the CDF Implementation Guidelines provided for a calendar of actives to guide the constituency planning and submission process. Our attempts to obtain data on project allocations from the past two years from local CDFC’s in a number of consistencies also failed.ke) indicates that project lists and progress reports were last updated in 2007/8. MPs were required to submit the list of the proposed constituency projects to the Clerk of the National Assembly before the month of February each year. They also enable the Board keep a track of CDF expenditure. and (b) A summary of the status of disbursements of funds to the constituencies for that preceding month. II. Removal of printed estimates unconstitutional The CDF Amendment Act.

According to official sources from the National CDF Management Board reports are slowly ‘trickling in’. A visit to the CDF website demonstrates that only a handful of constituencies have project status information up to 2008-2009. Further. 2009 where the Finance minister made amendments further to the public procurement and disposal regulations. III. 2004. Thus CDF is governed by the Government Financial Management Act. Illegal Procurement of CDF Projects Section 31 (1) of the CDF (Amendment) Act. However. if these reports have indeed not been completed for the past two financial years we wonder how constituencies have been able to receive disbursements without fulfilling their reporting requirements as the law stipulates this should be the case. It is noteworthy that each constituency has a fund manager who is responsible for the management of CDF record keeping and disbursements since their posting in 2007. The Constitution of Kenya Chapter VII. Dagoretti Constituency is one such constituency. but the board is unable to up load reports until it veri fies their accuracy. How then can the Board claim not have up-to-date reports? Given the requirements of the CDF law it is clear that the CDF Board is either in breach of the law. 2005. 63 of 18th September. . and The Public Procurement and Disposal Act. The Project Management Committee (PMC) is recognized in the CDF Amendment Act 2007 as the committee responsible for implementation of a project. whilst Dagoretti has project status information. further. The CDF Implementation Guidelines further expressly recognise PMC’s as a procurement unit also subject to government financial regulations. there are regulations including the latest through Kenya Gazette Supplement No. or deliberately withholding information. it does not have allocations information (Schedule 2) which is also a statutory requirement. 2007 states that all works and services relating to projects under this Act shall be sourced using existing Government procurement regulations.

However. 2005 Sec. Section 5 (1) of the Procurement Act states that where there is conflict with any other Act or regulation. It fails to expressly outlaw engagement as a supplier. Members of Parliament and their political cronies through the complicity of CDFC members are fleecing hundreds of millions of shillings from the constituency kitties through skewed processes. More critically the subversion of CDF procurement processes in this way. In simple terms Public Procurement & Disposal Act. expressly provides that where there is a conflict of interest the affected person shall disclose ones interest and not take part in the procurement proceedings. the Project Management Committee (PMC) has no legal mandate to award tenders under the current procurement law. IV. . Further. Thus all over the country CDF committee members act as suppliers to CDF in full knowledge of the authorities.However. 143 amended the Exchequer & Audit Act Cap 412 by deleting sec. whereas the Public Procurement & Disposal Act. undermines standards and wealth creation prospects for the constituency. Circular PPD2/20/29A/10 recognized PMC’s as Public Entities under the Exchequer & Audit Act Cap 412 sec. In direct contravention to this position the CDF Implementation Guidelines recognise PMC as procurement entities. the Public Procurement & Disposal Act. 5A (2h) hence mandated to establish tender committees. 2005 outlaws procurement by project management committees. This provision has widely been interpreted to mean that CDF committee members may act as suppliers/contractors to CDF as long as they disclose their interests and do not sit in the tender proceedings. It therefore appears that PMC procurement by CDF PMC’s is illegal. Conflict of interest legalised in CDF Further. 2005 section 43. Tendering and procurement procedures have become conduits through which some contractors. the Procurement Act shall prevail. pushes out genuine entrepreneurs and professionals. The Public Procurement Disposal Act legal notice no 141. portends to reconstitute the CDF tender committees and make this issue even more confusing. 5A hence PMC’s are not longer recognized as an independent public entity and cannot establish a tender committee. according to the Public Procurement Oversight Authority.

It is practice that the procurement law and CDF guidelines allow procuring unit members to act as tenderers. the CDF Act does not recognise this office as such. Further. VI. Despite strong provisions contained in the procurement law. the PMCs were allowed to provide labour and materials like ballast and timber creating a conflict of interest. and a failure to clarify this situation has resulted in millions being lost over the past 6 years. The PPOA website also does not publish advertisements on CDF open tenders for goods/ works above Kshs.Common abuses range from establishing personal fronts or ghost companies which are awarded CDF project tenders un-procedurally and use the opportunity to inflate prices of goods and services. Whereas Ministry of Planning regulations indicate that the DDO is the defacto accounting officer by virtue of being the AIE holder. but the 2007 Amendments removed this section entirely and did not reassign the functions to any office. However. V. CDF has no accounting officer Another weakness in the CDF accountability process is the absence of a clear accounting officer. refer cases of corruption to the Kenya Anti-Corruption Commission (KACC) as well as debar firms that have contravened the Act and Regulations from participating in future public transactions. In Nakuru Town. as required. Recent regulations seem to indicate that the fund manager may take up the role. A case in point is Mwatate Constituency in Taita Taveta where the former CDF committee treasurer was also doubling up as a contractor. the PPOA is not enforcing financial discipline to reign in runaway corruption in CDF. the powers of the Board to enforce prudent utilisation of funds was also removed with the deletion of sub-section 6(b) of the original Act. The 2003 CDF Act sections 7 assigned the responsibilities of the accounting officer to the then officer administering the fund. it is not clear how far PPOA has gone with these measures. . PPOA Asleep on the job The PPOA is empowered to investigate and submit evidence to prosecutors. 6 million.

the CDF Act is again in contravention of Government Financial Regulations which require that every public fund have an assigned accounting officer. under the revised act the responsibility to prepare accounts for audit is left vague and hanging. CDF Lacks Audit Under the 2003 CDF Act Section 7 (1) d. The procurement law further provides that financial records may be disposed of after 6 years and so in all likelihood Kenya’s will never really know what happened to their money. With procurement having been devolved to the constituency level and in the case of CDF to the project level.18 (2) of the exchequer and Audit Act. Minister of Planning Reports on CDF missing in action The law also states that the Minister shall table an annual report on the activities. a. The CDF board needs to make a report to the public on the status of CDF allocation and status reports. operations and expenditure under the Act. the National Audit Office which is presently not able to prepare timely audit reports for existing government bodies. provided that the officer administrating the fund would Prepare. Thus MP’s and CDF committees can sit pretty knowing their misdeeds will never be uncovered. During the preparation of this report we were unable to obtain these reports. The most recent Audit reports capture expenditure of the 2005/6 period. A clarification of the status of CDF project allocations reports. Section 34 of the 2007 CDF Amendment Act states that all funds received under the CDF Act shall be audited and reported upon by the Controller and AuditorGeneral. VIII. Given the afore mentioned. if they indeed exist beyond the preliminary reports prepared in 2003/4 and 2004/5. sign and transmit to the controller and auditor general accounts of the fund in accordance with section Cap 412.Without a clear accounting officer. . and in the public interest we demand the following. will never audit more than a sample of CDF projects. Did the 2007 Amendments deliberately wish to open up the fund to mismanagement or was this a gross oversight? VII. 1.

The previous constituency calendar should be improved upon based on best practices in participatory planning and implementation in devolved structures. 4. d. 2. The Ministry of Finance and Board need to move urgently to expressly outlaw CDF committee members and kin from acting as tenderers to CDF projects. Procurement needs to be streamlined a. 3. b. c.the ministry of finance needs to publish updated and consolidated procurement regulations in the interest of transparency. Numerous Civil Society Groups have expressed interest in partnering with the Board in the process of verification of data and it is high time the national CDF bodies recognise the benefits of such a move. The Ministry of Finance and the Board needs to urgently confer and establish a common position on procurement by PMC’s to bring it into compliance with the law.b. . d.. e. Piecemeal reforms of procurement regulations have resulted in a confusing picture. Penalties for this should be swift and steep to stamp out this practice that is killing the growth of genuine businesses in favour of brokers not committed to the provision of competitive and quality services.. The Board and Minister of planning need to make routine reports to the public on the status of CDF management and implementation to dispel anxiety and speculation about the mismanagement of CDF resources. The Board and PPOA need to enforce laid out regulations rigorously to stem the rampant corruption that has become the hallmark of CDF. CDF Board is complicit in the fleecing of CDF.. The Board needs to urgently update the website and make these records available to the public. CDF Calendar Parliament needs to move with haste to amend sections of the law and reinstate the annual CDF approval process including the printed estimates whereby all allocations and approvals will be made at the beginning of the financial year. The Board needs to publish a list of the status of disbursements to constituencies to enable the public effectively track local CDF expenditure. c..

failing to call Parliament and the Minister of Planning and in failing to give a report to the public they are betraying their mandate and betraying the trust of the public whom they represent. In failing to condemn failures in CDF management. It needs to stamp its supervisory and planning mandate to ensure the additionality of all development resources. The Ministers of Planning National Development and Vision 2030 and Finance should move fast to publish it and enact its provisions through the regulatory powers of their respective Ministries. Prime Minister Hon. If these institutions are not able to enforce discipline in the fund they should use their national stature to compel parliament to streamline the fund. The Ministry of Planning National Development and Vision 2030 as the architects and flag bearers of the Vision 2030 and in line with their stated core values of integrity. Kenya Episcopal Conference and SUPKEM and others. NCCK.It is noteworthy that the CDF Board has representatives from esteemed professional and religious bodies’ among them the Institute of Certified Public Accountants of Kenya. CC: His Excellency. The CDF task force received numerous constructive recommendations on how to streamline the funds’ operations. 5.. participatory development and results based approach need to act urgently to ensure that CDF meets its mandate to address poverty and regional inequalities.. Mwai Kibaki Harambee House Harambee Avenue Nairobi The Right Honourable. Raila Amolo Odinga . in accepting unlawful practices.. CDF Reform needs to happen now. this report is much awaited and the Minister of Planning owes members of the public who participated eagerly in the taskforce proceedings an update of its progress. The President Hon. If these bodies are not able to use their mandate to compel performance in CDF they should resign and make way for more serious board members.

Box 41842 Parliament Bldg. Parliament Road . Ekwe Ethuro Chairperson The Constituencies Fund Committee (CFC) Kenya National Assembly P. Box 74434-00200 Treasury Building. Haile Selassie Ave Hon.O. Mutula Kilonzo Minister Justice & Constitutional Affairs.O. Nairobi Harambee Avenue Hon. Parliament Road Mr. Amos Wako Attorney General State Law Office P.O. Box 56057 – 00200. P. Kenneth Marende National Assembly P. Nairobi Cooperative Bank House. Box 40112. O. 14th Floor.O Box 41842 Parliament Building. Harambee Avenue Nairobi Speaker of the National Assembly Hon.P.

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