Woes For Richest Woman In Ruto's Cabinet Amidst Ezra Chiloba Saga At CA

Former Communication Authority of Kenya (CA) Director General, Mercy Wanjau, who is now secretary to President William Ruto’s Cabinet, is revealed to have defaulted on a Ksh19.9 million repayment at the Authority, coming in the wake of the suspension of Ezra Chiloba.

Details of a report of the Special Board Audit and Risk Committee meeting held on August 8 seen by Viral Tea indicated that Wanjau was highlighted among cases of default in mortgage repayment for staff who have exited the Authority.

“Despite assurances from Management that there was no record of default or non-payment of the mortgage loans as shared in the Board meeting held on 3 May 2023, the audit exposed cases of default in mortgage repayment,” reads the report in part.

Wanjau, who declared her net worth to be Ksh475.4 million while she was being vetted by the National Assembly's Committee on Appointments prior to the Cabinet appointment last year, was revealed to have defaulted on the Ksh19.9 million mortgage since November 2022, as she was supposed to be paying Ksh108,267 every month.

Secretary to the Cabinet, Mercy Wanjau, appearing before the Parliamentary vetting Committee on October 22, 2022. /STANDARD DIGITAL

The auditors further flagged cases of understatement of loan balances for former staff of the Authority who resigned or retired.

In the case of  Wanjau who resigned, for instance, the CA records placed her outstanding mortgage loan as of June 30 at Ksh18,381,266, while the audit found it to be Ksh18,583,571.

There were also inadequate approvals of architectural plans or designs for the construction mortgage facility and auditors also found out that there were no site visits and inspections of houses mortgaged under CA's Staff Mortgage Scheme, which wound up costing the government millions of shillings.

CA officials did not conduct adequate records and documentation management in the administration of the scheme, the audit found. They also failed to insure property under the scheme for staff who exited service.

Other irregularities flagged in the audit report are failure to undertake timely mortgage insurance protection advance for the property, poor internal controls in the approvals and authorisation of the mortgage applications, and refinancing loans to CA staff that lack evidence of the upgrades or improvements for their purchased or construction houses.

“Refinancing amounted to Ksh364,815,120 representing 55.07% of the total outstanding balance and with no supporting evidence of upgrades done to the houses,” the report says.

There was also a failure to undertake due diligence on transactions between the seller and the buyer, with the auditors noting that in the matter of the mortgage loan process for Mr Chiloba, there was a direct conflict of interest and abuse of the process.

The total size of the loan book for the Scheme as of June 2023 as per the payroll records seen by the auditors was Ksh662,405,123.94, distributed into construction loans of Ksh72,243,324; house purchase loans of Ksh196,471,864; loan refinancing loans of Ksh364,815,120 and outstanding loan balances for ex-staff of Ksh28,874,815.

For Ezra Chiloba's case, who is now suspended as CA Director General, he applied for and self-approved a Ksh25 million mortgage loan to facilitate the purchase of a property between himself and Jacob Simiyu Wakhungu without subjecting the transaction details to interrogation and approval by a higher authority.

CA, as Viral Tea had exclusively reported, had listed a disbursement of the loan of Ksh25,000,000 to Kitale Hilmost Limited, but a Company Search with the Business Registration Bureau revealed that the seller entity is owned entirely, as the sole shareholder and the sole director, by Chiloba, the Director General who is also the buyer in this case.

"This is reasonably construed to be demonstrative of an intent to defraud the Authority," the statement of the meeting accused the former Chief Executive Officer (CEO) of the Independent Electoral and Boundaries Commission (IEBC).

The board in the meeting cited a letter dated December 3, 2022, with instructions to pay the Ksh25 million to Chiloba's entity, directions which were adhered to on August 11, 2023.

Chiloba is also said to have purchased a house and seven acres of land which is beyond the required one-acre limit provided by the Civil Servants Housing scheme requirement.

The committee noted that Chiloba’s loan application was approved by a junior staff member and there is no evidence to support the fact that the junior staff member carried out requisite due diligence and advice management including but not limited to the relationship between the seller and the buyer and the size of the property.

CA found that there was an overvaluation of the property by 64.47% which is contrary to the entitlement of 1 acre resulting in a mortgage of Ksh25 million instead of Ksh16,720,000