Plan to impose fines over pending bills raises jitters
Governors and senators are set for a major showdown over plans to impose a Sh5 million fine or five-year jail term on public officers who fail to pay contractors and suppliers on time.
This comes amid ballooning county pending bills which are now at Sh158 billion.
Governors are opposed to the proposal contained in the Prompt Payments Bill 2022 currently before the Senate.
The Bill, reintroduced by Nominated Senator Mariam Sheikh Omar, seeks to put in place a legal framework to facilitate prompt payment for the supply of goods, works and services procured by government entities both at the national and county levels.
It is meant to tame the rise in pending bills that have sent contractors and small businesses into cash flow woes, forcing some to close down or reduce the number of staff to remain afloat.
The Bill states that an accounting officer who, without reasonable cause or negligently, fails to pay the amount due commits an offence and shall be liable to pay a fine not exceeding Sh5 million or imprisonment for a term not exceeding five years or both.
However, the Council of Governors (CoG) said the penalties prescribed in the Bill, now in the second reading, are punitive to public officers, specifically those in the counties who earn as little as Sh300,000 a month.
Appearing before the Senate Finance and Budget committee, the county bosses instead said the penalties should be reduced to Sh500,000 and/or a one-year jail term.
Good faith
CoG Finance committee chairperson Fernandes Barasa called on the senators not to pass the Bill as it is currently, saying imposing punitive fines on county procurement or finance officers will not be in good faith as some of the delays in payment of contractors stem from issues above the officers’ control.
He said it will not be in good faith to charge or imprison an accounting officer for issues like delayed disbursement of funds to counties by the National Treasury or lack of supporting documents for some contracts, which are some of the major factors delaying payments.
“We are asking for the punitive clause to be relooked at as the aim of the Bill is to come up with a corrective and not a punitive measure. We propose that if there is interest to be paid, the penalty should be set at Sh500,000 or one year in jail,” said the Kakamega governor.
For his part, Kisii Governor Simba Arati said delays in settling supplier or contractor bills can arise due to errors, lack of proper documentation and lack of prompt Exchequer releases from the Treasury.
He instead said what is needed is a clause to tame mischief during transitions by outgoing governors who leave their successors with huge pending bills.
“We need a clause to tame outgoing officers, including governors, from causing problems to incoming officers. You cannot jail an accounting officer earning less than Sh300,000 monthly with a Sh5 million fine and/or five years in prison,” said Mr Arati. “The penalty should not be too punitive but it should be a deterrent for non-payment.”
However, the committee argued that the proposal is meant to deter public officers from failing to settle pending bills when due.
Migori Senator Eddy Oketch held that the clause is not punitive enough. “I still hold that the punishment is lenient as the fines will introduce good manners as well as put absolute caution to procurement officers involved in procurement mischief,” said Mr Oketch.
According to Ms Omar, should the Bill be enacted, it shall apply to all procurement transactions by the national and county governments.
“A supplier and a procuring entity shall, at all times, deal with each other fairly and lawfully,” the Bill reads in part.
The National Assembly made changes to the Prompt Payments Bill that had recommended payment to suppliers and contractors within 90 days of receiving an invoice.
The National Assembly’s Finance Committee reduced the payment period in line with the two months prescribed in the Public Procurement and Asset Disposal Regulations, 2020.
The committee is currently collecting views from various stakeholders before submitting the document to the House for debate, adoption or adoption with amendments. BY DAILY NATION
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