RBA orders audit of KPA pension scheme Sh4bn Nairobi project
A Sh4 billion housing project by the giant Mombasa-based Kenya Ports Authority pension scheme is set for a forensic audit following claims of irregularities in the venture.
Sources at the Retirement Benefits Authority (RBA) told Nation that concerns have been raised about the transactions on a project by the pension scheme.
“There are queries that have been raised about a project by the scheme in Nairobi and the regulators will seek to find answers through an audit,” a source said.
RBA — which regulates the scheme — has already invited bids from consultancy firms to conduct the forensic audit which seeks to expose the financial dealings and job contracts in the project within Nairobi’s South C suburb.
“The authority seeks to conduct a thorough investigation in form of a forensic audit on one of the projects undertaken by the scheme. The project relates to the development and sale of apartments on the scheme’s land located in Nairobi,” the regulator said in a brief.
“The objectives of the forensic audit shall be to carry out an examination of scheme documents, financial records, identify any mismanagement of scheme funds whether deliberate or fraudulently or otherwise, and the scheme activities in relation to the project,” it added.
The request for a forensic audit of the housing project means that there may be suspected fraud. A forensic audit involves the evaluation of a firm's or individual's financial records. During a forensic audit, an auditor seeks to derive evidence that could potentially be used in court. A forensic audit is used to uncover criminal behaviour such as fraud or embezzlement.
6-month analysis
RBA said investigators would over six months analyse the financial books and accounts of the pension scheme and its contract deals.
“The forensic auditor or investigator appointed shall be required to review the extent of the breach of contractual agreements, if any, and the financial implications, analyse the contracts and or leases between the vendors and the purchasers of the apartments and analyse the costs related to undertaking the project,” the regulator added.
The audit would also cover the scheme’s policies and procedures, including procurement and disposal procedures and in particular, procedures used in identifying the developer and any other provider concerning the housing project.
Further, the investigators will be required to identify any false, forged, or fraudulent documents and accounting entries in the books and records and identify and quantify documentary evidence of suspected misappropriated or loss of funds.
The KPA pension scheme had by the time of going to press not responded to an email by Nation seeking comment on the upcoming forensic audit by RBA.
The KPA retirement benefits scheme is a defined contribution (DB) scheme—a type of pension scheme that promises an employee a defined amount of retirement income. The amount of benefit that the employee is entitled to in retirement is defined in advance.
The latest available official records show that the KPA pension scheme was valued at Sh22.39 billion as of December 30, 2021.
The KPA pension scheme has through a special purpose vehicle constructed maisonettes and apartments for sale, namely Bandari Villas in Nairobi’s South C and Bandari apartments in the city’s Bellevue area.
The construction of the Bandari Villas began in 2006 and comprised 135 four-bedroom maisonettes built in three phases. The project has since been completed and all the units sold and handed over to the owners.
Following the successful completion of the Bandari Villas project, the scheme then embarked on the construction of the two-phased Bandari apartments. The project began in 2009.
The second phase of the Bandari apartments project consists of 198 three-bedroom units spread over three high-rise buildings within a gated community. Each building comprises 11 floors, with each floor carrying six apartments. BY DAILY NATION
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