State officers who divert funds meant for projects face harsh punishment including dismissal and jail terms in a tough proposed Bill that seeks to ensure timely payment for contractors.
The Public Finance Management (PFM) Act, 2025 compels state agencies to open a project-specific bank account where funds meant for every project would be wired.
“All funds disbursed by the National Treasury to ministries and state departments, SAGAs and parastatals for approved projects in the annual budget shall be deposited in the designated project-specific bank accounts,” the Bill states.
These accounts, the Bill states, shall be opened and maintained solely for the management and execution of the approved project to which the funds are allocated.
The Bill has been sponsored by Rongo MP Paul Abuor.
The Bill provides that any accounting officers or AIE (Authority to Incur) found to have diverted funds from the project-specific bank accounts to unauthorised uses shall face a penalty equivalent to 150 per cent of the amount misused.
“All funds from the Treasury will now be directed to accounts dedicated solely to the implementation of specific projects. This ensures that the funds are not misdirected or misused,” Abuor said.
The fine is recoverable as debt owed to the government. Besides, the officer shall also face immediate suspension and potential dismissal from public service, subject to investigation.
“The officer shall be liable to a term of imprisonment not exceeding five years upon conviction,” Abuor told journalists at a press conference in Parliament Buildings on Monday.
“Any bank found to have facilitated the unauthorised withdrawal or transfer of funds from project-specific accounts shall be subject to financial penalties and other legal actions as determined by CBK,” he stated.
Abuor, in his proposal, amends section 19 of the principal Act to compel the Controller of the Budget to monitor the expenditures.
“The CoB shall ensure that the funds are disbursed to project-specific accounts and shall provide quarterly reports on compliance by ministries, state departments, SAGAs and parastatals,” Abuor said in the Bill.
The Bill mandates the National Treasury to develop and maintain a digital platform for tracking the utilisation of project-specific accounts, accessible by oversight bodies and the public.
Further, the proposal law requires the Treasury, in partnership with other oversight bodies, to conduct periodic training for AIE holders and accounting officers on their requirements and obligations.
“The Ministries, SAGAs and parastatals shall submit monthly expenditure reports for each project-specific account to the Treasury, the Auditor General and Parliament,” Abuor said.
