An audit has flagged an irregular investment of money meant for coffee farmers.
The Sh2.1 billion coffee cherry fund cash was deposited in a commercial bank contrary to directives of the National Treasury.
Auditor General Nancy Gathungu said farmers have not obtained value for money in the circumstances.
She said it was wrong for the fund administrators to deposit the non-disbursed funds amounting to Sh2,181,054,794 in a call account.
Gathungu cited a National Treasury circular of March 26, 2018, which directed all state corporations and semiautonomous government agencies on how to handle surplus.
Treasury said all surplus be invested in treasury bills or treasury bonds directly through the Central Bank of Kenya.
All funds previously held in fixed deposits in commercial banks or financial institutions were not to be rolled over but retired and invested in treasury bills or bonds.
This was to be done without intermediaries, hence the query at the coffee cherry fund.
“In the circumstances, management was in breach of the law,” Gathungu said in a report obtained by the Star.
The Auditor General, in the review of the fund’s books of accounts for the year to June 30, 2023, also cited irregularities with Sh181 million interest earned from the deposits.
It emerged that the balances held with the commercial banks on call deposit had accumulated the unapplied interest of Sh181,054,794.
Unapplied funds do not benefit from interest unless rolled over as part of the principal balances.
Gathungu said the situation has denied the fund the benefit of a higher return on the unpaid funds.