Introduction

Public finance is a field of economics concerned with how governments raise money, how governments spend that money and the effect of these activities on the economy and the society.
Chapter 2 of the Constitution of Kenya, 2010 provides for public finance, which is seen as a national resource geared towards sustainable funding for public benefit through public service delivery by the Government at the national and county levels. The principles of public finance which have been expressly provided for in the Constitution include:

1. openness and accountability, including public participation in financial matters;
2. public finance system to promote an equitable society, and in particular-
   • the burden of taxation to be shared fairly;
   • revenue raised nationally to be shared equitably among national and county governments;
   • expenditure to promote the equitable development of the country, including making special provision for marginalized groups and areas;
3. the burdens and benefits of the use of resources and public borrowing to be shared equitably between present and future generations;
4. public money to be used in a prudent and responsible way; and
5. financial management to be responsible, and fiscal reporting to be clear.

Revenue raised nationally is supposed to be shared equitably between the two levels of government which are the national and county governments. County governments are to be given additional allocations from the national government’s share of revenue either conditionally or unconditionally.
Public finance focuses on various factors in Kenya which include:

1. tax incidence which means the party paying a specific tax;
2. efficiency of government in public financial management;
3. the government’s function in accomplishing distribution of income with the help of taxation, transfer payments and government expenditure on commodities;
4. the effectiveness and distribution results of various types of taxes, such as consumption tax and income tax;
5. the ambit of government functions taking into consideration the markets, public goods, and externalities;
6. supply of commodities and services as prescribed by the government versus voluntary interchange;
7. public expenditure model, fiscal policies, and taxation policies; and

The various means through which the financing process of government is performed include:

Government debt

1. The government can raise money through borrowing or taking loans.
2. In Kenya, “government debt” also refers to the debt of the national or county government. In contrast, the annual “government deficit” refers to the difference between government receipts and spending in a single year, that is, the increase of debt over a particular year.
3. Parliament through a legislation approved by the members may set out the terms on which the national government may borrow and it may also impose reporting requirements in respect of such borrowing.
4. The Cabinet Secretary responsible for finance matters is expected within seven days through requests by resolution of either House of Parliament to furnish the relevant Committee with information relating to any particular loan or guarantee and any other information which is to include:
   • the extent of the total indebtedness by way of principal and accumulated interest;
   • the manner in which the proceeds of the loan has been used or is to be used;
   • the provision stipulating how servicing or repayment of the loan is going to be met; and
   • the progress made in terms of payment with respect to clearing the loan.
5. The only instances where a county government may borrow include:
   • if the national government commits itself by making a promise to provide the loan; and
   • with the county government’s assembly approval.

Taxation

1. Tax is a financial charge or other levy imposed upon a taxpayer, either as an individual or legal entity, by a government or the functional equivalent of a government to fund various public expenditures. Failure to pay, or evasion of or resistance to taxation, is punishable by law.
2. The national government may as one of its obligations impose value-added tax, income tax, customs duties and other duties on goods which are to be exported or imported; and excise tax.
3. The county government may impose property taxes, entertainment taxes; and any other taxes authorized by an Act of Parliament. However, the taxation and other revenue-raising powers vested to the county government shall not be exercised in a manner that will pose to be detrimental to national economic policies, economic activities across county boundaries or the national mobility of services, goods, labour or capital.

Seigniorage

This is the difference between the value of money and the cost to produce and distribute it. The term can be used in the following ways:

1. Seigniorage obtained from metal coins, specie is a tax usually added to the aggregate price of a coin (production costs and metal content), that a customer of the mint had to pay to the mint, and it was as a matter of practise sent to the leader of the political area.
2. Seigniorage obtained from notes is more indirect, as it was the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes.

Seigniorage in relation to some governments is a convenient source of revenue. However, seignioarge revenue in Kenya is facing challenges since mobile transfer of money through digital platform has effectively ensured that there are less physical banknotes in circulation. This is premised on the fact that seigniorage is the difference between the true cost of issuing a currency in physical form and its monetary value. The more the currency circulates and is transformed into digital platform, i.e. Safaricom’s M-Pesa and Airtel’s mobile money transfer etc, the less it is in physical circulation thereby effectively undermining an important source of revenue for the state.
After the promulgation of the Constitution of Kenya 2010 on 27th August, 2010, which created two levels of government; national and county, there was need to enact laws to provide for management of public finance.
The Public Finance Management Act (Cap.412C) (“PFM Act”) was assented into law on 24th July, 2012. The PFM Act aims at promoting transparency and accountability in the management of public finances at both levels of government; the National Government and County Government. The Public Finance Management Act repealed the following laws:

1. the Fiscal Management Act (No.5 of 2009);
2. the Government Financial Management Act (No. 5 of 2004);
3. the Internal Loans Act (Cap. 420);
4. the Contingencies and County Emergency Funds Act (No. 17 of 2011);
5. the National Government Loans Guarantee Act (No. 18 of 2011); and
6. the External Loans and Credits Act (Cap. 422).

The PFM Act has detailed provisions as to how resources are to be shared in the country between the two levels of government; the national government and the county government and it also establishes new institutions mandated to deal with matters relating to public finance. Such institutions include the Commission on Revenue Allocation (CRA) and the Office of the Controller of Budget, amongst others, which all have distinct functions aimed at ensuring efficiency within the finance sector is enhanced.
The need for reforming the public financial management sector in Kenya can be attributed to previous challenges faced and gaps identified that resulted to embezzlement of public funds, inequities arising in resource redistribution nationally and centralized systems of governance with inadequate checks and balances. The PFM reforms in Kenya were aimed at ensuring the public financial management is more effective, efficient, participatory, inclusive and transparent resulting in improved accountability and better service delivery.
Other relevant public financial management legal instruments in Kenya include:

The Commission on Revenue Allocation Act (Cap. 5E)

1. The Act establishes the Commission on Revenue Allocation which in addition to its principal functions under Article 216(1) of the Constitution can make recommendations to Parliament prior to any Bill requiring appropriation money from the Equalization Fund is passed in Parliament.
2. The Commission upon receiving a request from the Senate, can make recommendations on the basis for allocating among the 47 counties the share of national revenue that is annually allocated to the county levels of government.
3. The Commission can further submit recommendations to the Senate, National Assembly, national executive, County Assembly and county executive on the proposals made for equitable distribution of revenue between the national and county governments taking into account the criteria set out in Article 203 of the Constitution on equitable share and other financial laws.

The Independent Offices (Appointment) Act (Cap. 181)

1. The Act establishes the independent offices of the Auditor-General and Controller of Budget in accordance with Article 248(3) of the Constitution of Kenya 2010.
2. The powers vested to independent offices include conducting investigations on its own initiative or on complaint made by a member of the public or to issue summons to witnesses to assist in its investigations.
3. The Controller of Budget is tasked with ensuring various mandates in relation to public finance are achieved. The mandates include to:
   • oversee the implementation of the budgets of the national and county governments by authorizing withdrawals from public funds under Article 204, 206 and 207 of the Constitution of Kenya 2010;
   • only approve withdrawal from public funds if authorized by law; and
   • submit every four months to each House of Parliament a report on the implementation of the budgets of the national and county governments.
4. The Auditor- General is mandated to audit and report within six months after the end of each financial year:
   • the accounts of the national and county governments;
   • the accounts of all funds and authorities of the national and county governments;
   • the accounts of all courts;
   • the accounts of the National Assembly, the Senate and the county assemblies;
   • the accounts of political parties funded from public funds;
   • the public debt; and
   • the accounts of any other entity that legislation requires the Auditor-General to audit.
5. The Auditor-General’s audit report is expected to confirm whether or not public money has been applied lawfully and in an effective way.
6. The audit reports submitted to Parliament or relevant county assembly are supposed to be discussed within three months of receipt for appropriate action to be taken.

The Public Audit Act (Cap. 412B)

Audits of Government

1. The Treasury is required to prepare accounts showing fully the financial position of the Government at the end of the year and submit the accounts to the Controller of Budget and Auditor-General.
2. The Controller of Budget and the Auditor-General shall audit the Treasury accounts, accounting officer accounts, receiver of revenue accounts, accounts of special fund administrators and trust or fund accounts; and express an opinion on the accounts based on the results on each audit  stating whether:
   • all information and explanations considered necessary for the audit were received;
   • proper records of all transactions were maintained as required under the generally accepted accounting standards;
   • the accounts are in agreement with the records referred under (2) above; and
   • in their opinion, the accounts fairly reflected the financial position of the entity audited.
3. The audit report is to be submitted to the Minister responsible for finance within six months after the end of the financial who will further submit the report to the National Assembly. The time for submitting may be extended by the National Assembly.
4. The audit report is expected to identify cases in which:
   • money has been spent in a way that was not efficient or economical;
   • the rules and procedures followed, or the records kept, were inadequate to safeguard property and collection of revenue;
   • money that should have been paid to the exchequer account was not so paid;
   • money has been spent for purposes other than the purposes for which it was appropriated by Parliament; and
   • satisfactory procedures have not been established to measure and report on the effectiveness of programmes.

Audits of State Corporations

1. For each financial year, each state corporation shall prepare and submit for audit accounts to the Controller and Auditor-General accounts which shall include the following:
   • a balance sheet showing the assets and liabilities as of the end of the financial year;
   • a statement of the income and expenditures for the financial year;
   • a cash flow statement for the financial year; and
   • any other statements and accounts that may be necessary to fully disclose the financial position of the State Corporation.
2. The Controller and Auditor-General shall examine and audit the accounts submitted by a State corporation within three months after the end of its financial year, express an opinion and certify the results of the examinations and audits.
3. The Controller and Auditor-General thereafter prepare a report to be submitted to the Minister responsible for Finance who will submit it further to the National Assembly.

Audits of Local Authorities (currently County Governments)

1. The Controller and Auditor-General shall audit the accounts prepared and submitted by the local authorities. The accounts will be examined and be certified.
2. The audit report shall be submitted to the Minister responsible for finance who further submits it to the National Assembly for discussion.

The current Constitutional provisions on public audit

1. Under the Constitution of Kenya, 2010, the office of the Controller and Auditor-General has been split into the Office of the Controller of Budget and the Auditor-General under Articles 228 and 229.
2. The Controller of Budget shall submit to each House of Parliament every four months a report on the implementation of the budgets of the national and county governments. The Auditor-General’s audit reports on the other hand shall be submitted to Parliament or the relevant county assembly.
3. This effectively means that the provisions under the Public Audit Act on presentation of reports to the Minister responsible for Finance require to be amended to reflect the current situation under the Constitution in relation to the national and county governments.
4. The words “Minister responsible for finance” under the Act need to be replaced with the “Cabinet Secretary responsible for finance” where necessary.

The Public Procurement and Disposal Act (Cap. 412A)

1. The Act provides procedures for procurement and disposal of unserviceable, obsolete or surplus stores or equipment by public entities to achieve the following objectives:
   • to maximize economy and efficiency;
   • to promote competition and ensure that competitors are treated fairly;
   • to promote the integrity and fairness of those procedures;
   • to increase transparency and accountability in those procedures;
   • to increase public confidence in those procedures; and
   • to facilitate the promotion of local industry and economic development.
2. The Act establishes the Public Procurement Oversight Authority, the Public Procurement Oversight Advisory Board and Public Procurement Administrative Review Board with the mandates of ensuring that the procurement process is never flouted and tenders are awarded to those who rightfully deserve.
3. The Constitution further requires any State organ or any other public entity which contracts goods or services to ensure their systems are fair, competitive, transparent and cost-effective.
4. The Act ensures public money is not spent to procure defective or non-existing goods and services as was the case in the Anglo Leasing scandal.

Anti-corruption legal framework in Kenya

There is a direct link between public finance and anti-corruption laws. Anti-corruption laws act as a deterrence to wasteful expenditure of public money by public officials since they prescribe offences and penalties in relation to corrupt activities. The laws in Kenya dealing with corruption include:

Anti-Corruption and Economic Crimes Act (Cap.65)

1. This is an Act of Parliament for the prevention, investigation and punishment of corruption, economic crime and related offences.
2. The Act provides that the Chief Justice by notification in the Kenya Gazette appoint as many special Magistrates as necessary for any area or cases to try the following offences:
   • corruption and economic crimes and related offences; and
   • any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified above.
3. The Act establishes the Kenya Anti-Corruption Advisory Board whose principal function is to advise the Commission generally on the exercise of its powers and the performance of its functions.
4. The Secretary of the Kenya Anti-Corruption Advisory Board or a person authorized by him may conduct investigation on behalf of the Commission.
5. When the Commission receives a complaint concerning corrupt conduct on the part of any person and the Commission declines to investigate or discontinues its investigation before the investigation is concluded, the Commission shall inform the complainant in writing of its decision and of the reasons for its decision.
6. In the course of investigation, if the Secretary reasonably suspects that a person has been involved in a corruption or economic crime, such a person will be required to furnish the Secretary as regards to the property held by such a suspect with:
   • history of property and how it was acquired; and
   • stating in relation to the property that was acquired at or about the time of suspected corruption or economic crime, whether the property was acquired by purchase, gift, inheritance or any other manner, and what consideration, if any, was given for the property. Failure to do so will lead to a fine not exceeding three hundred shillings or to imprisonment for a term not exceeding three years, or both.
7. The Commission only has investigative powers and lacks prosecutorial powers. Accordingly, the Commission presents quarterly reports to the Director of Public Prosecutions (DPP) for prosecution and the copies are also presented to the Attorney General who shall lay it before the National Assembly. The DPP will then prepare an annual report on the status of prosecution of the corruption and economic crimes which the Attorney-General shall thereafter lay each annual report before the National Assembly within the first ten sitting days of the National Assembly following the end of the year to which the report relates.

Ethics and Anti-Corruption Commission Act (Cap.65A)

1. This is an Act of Parliament establishing the Ethics and Anti-Corruption Commission (EACC) pursuant to Article 79 of the Constitution to replace the then Kenya Anti-Corruption and Commission.
2. The Constitution also provides that as soon as practicable after the end of each financial year, each Commission including EACC, shall submit a report to the President and to Parliament. At any time, the President, the National Assembly or the Senate may require the commission to submit a report on a particular issue, and such report shall be published and publicized.
3. The additional functions of the Ethics and Anti-Corruption Commission include:
   • in relation to State officers, to develop and promote standards and best practice in integrity and anti-corruption including developing a code of ethics;
   • working with other State and public offices in the development and promotion of standards and best practices in integrity and anti-corruption;
   • receiving complaints on the breach of the code of ethics by public officers;
   • investigating and recommending to the Director of Public Prosecutions the prosecution of any acts of corruption or economic crimes or violation of codes of ethics or other matter prescribed under this Act, the Anti-Corruption and Economic Crimes Act or any other law enacted pursuant to Chapter Six of the Constitution;
   • recommending appropriate action to be taken against State officers or public officers alleged to have engaged in unethical conduct;
   • overseeing the enforcement of codes of ethics prescribed for public officers;
   • advising, on its own initiative, any person on any matter within its functions;
   • raising public awareness on ethical issues and educate the public on the dangers of corruption and enlist and foster public support in combating corruption but with due regard to the requirements of the Anti-Corruption and Economic Crimes Act of 2003 as to confidentiality;
   • subject to Article 31 of the Constitution of Kenya 2010, monitor the practices and procedures of public bodies to detect corrupt practices and to secure the revision of methods of work or procedures that may be conducive to corrupt practices; and
   • instituting and conducting proceedings in court for purposes of the recovery or protection of public property, or for the freeze or confiscation of proceeds of corruption or related to corruption, or the payment of compensation, or other punitive and disciplinary measures.
4. The Commission may cooperate and collaborate with other State organs and agencies and any foreign government or international or regional organizations in the prevention and investigation for corruption.
5. The Commission shall have the following powers:
   • educate and create awareness on any matter within the Commission’s mandate;
   • undertake preventive measures against unethical and corrupt practices;
   • conduct investigations on its own initiative or on a complaint made by any person;
   • conduct mediation, conciliation and negotiation; and
   • hire such experts as may be necessary for the performance of any of its functions.
6. The Commission shall, at the end of each financial year cause an annual report to be prepared, which shall be submitted to the President and the National Assembly three months after the end of the year to which it relates, and shall contain the following:
   • the financial statements of the Commission;
   • a description of the activities of the Commission;
   • such other statistical information as the Commission may consider appropriate relating to the Commission’s functions;
   • any recommendations made by the Commission to State departments or any person and the action taken;
   • the impact of the exercise of any of its mandate or function;
   • any impediments to the achievements of the objects and functions under the Constitution, this Act or any written law; and
   • any other information relating to its functions that the Commission considers necessary.

Public Officer Ethics Act (Cap.183)

1. This is an Act of Parliament to advance the ethics of public officers by providing a Code of Conduct and Ethics for public officers and requiring financial declarations from certain public officers.
2. Each Commission is to establish a specific Code of Conduct and Ethics for the public officers for which it is the responsible Commission.
3. Each Commission shall publish the specific Code of Conduct and Ethics established by it in the Gazette within ninety days after the Commencement of the Act.
4. The Code of Conduct and Ethics shall generally provide for:
   • performance of duties by public officer which should be to the best of his ability and honestly;
   • professionalism in which the public officer is expected to carry out his duties in a way that maintains public confidence in the integrity of his office including treating his fellow public officers with courtesy and respect;
   • rule of law in which the public officer is expected to carry out his work in accordance with the law;
   • no improper enrichment;
   • conflict of interest in which the public officer is expected to avoid being in a position in which his personal interests conflict with his official duties;
   • collection and harambees in which the public officer is not expected to use his office or place of work as a venue for soliciting or collecting harambees or either be a collector or promoter of a public collection;
   • prevention of a public officer from acting for foreigners which might be detrimental to the security interest of Kenya;
   • taking care of property entrusted to him or her; and
   • political neutrality;
5. Every public officer shall, once every two years as prescribed by Section 27, submit to the responsible Commission for the public officer a declaration of the income, assets and liabilities of himself, his spouse or spouses and his dependent children under the age of 18 years.
6. A person who fails to submit a declaration or clarification as required or who submits, in such a declaration or clarification, information that he knows, or ought to know, is false or misleading, is guilty of an offence and is liable, on conviction, to a fine not exceeding one million shillings or to imprisonment for a term not exceeding one year or to both.
7. This Act is intended to prevent public officers from living a larger than life lifestyle which cannot be explained through lawful means due to engagement in corrupt activities.

Leadership and Integrity Act, Cap.182

1. This is an Act of Parliament to give effect to and establish procedures and mechanisms for the effective administration of Chapter six of the Constitution of Kenya 2010.
2. The Act provides that a State officer shall respect the values, principles and the requirements of the Constitution including:
   • the national values and principles provided for under Article 10 of the Constitution;
   • the rights and fundamental freedoms provided for under Chapter Four of the Constitution;
   • the responsibilities of leadership provided for under Article 73 of the Constitution;
   • the principles governing the conduct of State officers provided for under Article 75 of the Constitution;
   • the educational, ethical and moral requirements in accordance with Articles 99(1)(b) and 193(1)(b) of the Constitution;
   • in the case of County governments, the objectives of devolution provided for under Article 174 of the Constitution; and
   • in so far as is relevant, the values and principles of Public Service as provided for under Article 232 of the Constitution.
3. A general Leadership and Integrity Code is to be developed for State officers with general provisions for public trust, rule of law, responsibilities and duties, performance of duties, professionalism, financial integrity, self-declaration, moral and ethical requirements, gifts or benefits in kind, wrongful or unlawful acquisition of property, conflict of interest, participation in tenders, public collections, bank accounts outside Kenya, acting for foreigners, care of property, misuse of official information, political neutrality, impartiality, giving advice, gainful employment, offers of future employments, former state officers acting in a Government or public entity matter, misleading the public, falsification of record, citizenship, tax, financial and legal obligations, bullying, acting through others and reporting improper orders.
4. Each public entity shall prescribe a specific Leadership and Integrity Code for the State officers in that public entity.
5. State officers are expected to sing the specific Leadership and Integrity Code issued by the relevant public entity at the time of taking the oath of office or within seven days of assuming a State office. A breach of the Code amounts to misconduct for which the State officer may be subjected to disciplinary proceedings.
6. A person who alleges that a State officer has committed a breach of the Code, may lodge a complaint with the relevant public entity and the public entity shall register and inquire into the complaint.
7. If upon investigation, the public entity is of the opinion that civil or criminal proceedings ought to be preferred against the respective State officer, the public entity shall refer the matter to:
   • the Commission or the Attorney-General, with respect to civil matters; or
   • the Director of Public Prosecutions, with respect to criminal matters; or
   • any other appropriate authority.
8. A person shall not:
   • without justification or lawful excuse, obstruct, hinder, assault or threaten a person undertaking his or her duties under the Act; or
   • deceive or knowingly mislead the Commission, a public entity or a person undertaking his or her duties under the Act; or
   • destroy, alter, conceal or remove documents, records or evidence that the person believes, or has grounds to believe may be relevant to an investigation or proceedings under the Act; or
   • provide false information to the Commission, a public entity or a person acting under the Act.
9. A person who contravenes the above commits an offence and is liable, on conviction, to a fine not exceeding five million shillings, or to imprisonment for a term not exceeding five years, or to both.This Act ensures that State Officers are people of high integrity and above reproach who are not corrupt or susceptible to engage in corrupt activities.

Proceeds of Crime and Anti-Money Laundering Act, Cap.59B (AML)

1. This is an Act of Parliament to provide for the offence of money laundering and to introduce measures for combating the offence, to provide for the identification, tracing, freezing, seizure and confiscation of the proceeds of crime.
2. The offence of money laundering in Kenya is committed if a person:
   1. enters into any arrangement or engages in any arrangement or transaction with anyone in connection with that property, whether that agreement, arrangement or transaction is legally enforceable or not; or
   2. performs any other act in connection with such property, whether it is performed independently or with any other person, whose effect is to conceal or disguise the nature, source, location, disposition or movement of the property or the ownership of the property or any interest anyone may have in respect of the property; or
   3. remove or diminish any property acquired directly, or indirectly, as a result of the commission of an offence.
3. The offence of money laundering is committed where a person acquires, uses or has possession of property and at the time of acquisition, use or possession the person knows or ought reasonably to have known that it is or forms part of the proceeds of crime committed by another person.
4. The offence is committed when a person who, knowingly transports, transmits, transfers or receives or attempts to transport, transmit, transfer or receive a monetary instrument or anything of value to another person, with intent to commit an offence.
5. The penalty for the offence of money laundering under sections 3, 4 or 7 of the Proceeds of Crime and Anti-Money Laundering Act is in the case of a natural person imprisonment for a term of not exceeding 14 years, or a fine not exceeding Shs.5 million or the amount of the value of the property involved in the offence, whichever is higher, or both such fine and imprisonment and in the case of a body corporate a fine not exceeding Shs.25 million or the amount of the value of the property involved in the offence, whichever is higher.
6. Failure to report suspicion regarding proceeds of crime – under section 5 of the AML Act, a person who willfully fails to comply with an obligation contemplated in section 44(2) of the AML Act commits an offence. An obligation is imposed on a reporting institution to monitor and report suspected money laundering activity. The section specifically imposes a duty on a reporting institution to monitor on an ongoing basis all complex, unusual, suspicious, large or other transactions as may be specified in the regulations, whether completed or not, and shall pay attention to all unusual patterns of transactions, to insignificant but periodic patterns of transactions that have no apparent economic or lawful purpose as stipulated in the regulations.  Section 44(2) imposes the duty on a reporting institution, upon suspicion that any of the transactions and activities specified in section 44(1) or any other transaction or activity could constitute or be related to money laundering or the proceeds of crime, a reporting institution, to report the suspicious or unusual transaction or activity to the Centre in the prescribed form immediately and, in any event, within 7 days of the date the transaction or activity that is considered to be suspicious occurred. The penalty for the offence of failure to submit a suspicious activity report is for a natural person imprisonment for a term not exceeding 7 years or a fine not exceeding Shs.2.5 million or both and in the case of a body corporate a fine not exceeding Shs.10 million or the amount of the value of the property involved in the offence, whichever is higher.

Corruption cases in Kenya include:

Director of Public Prosecutions v. Samuel Kimuchu Gichuru & another [2012] eKLR (Criminal Revision 926 of 2011)

1. These proceedings arose from a warrant of arrest in Jersey for false declarations, fraud and money laundering where the Jersey police want Chrysanthus Barnabas Okemo and Samuel Kimuchu Gicheru to answer to multiple charges of illegally defrauding the Kenya Power and Lighting Company of at least Kshs.900 million between 1999 and 2003. At the time Okemo was Minister of Finance and Gichuru was Managing Director of KPLC.
2. By a letter dated 6th July 2011, Hon. Keriako Tobiko, the Director of Public Prosecutions in the exercise of the powers conferred on his office under section 7(1) of the Extradition (Commonwealth Countries) Act, Chapter 77 of the Laws of Kenya as read with Section 7 of the Sixth Schedule to the Constitution, while signifying that a request had been made to him by a competent Judicial Authority of the United Kingdom on behalf of the Island of Jersey, for the surrender of fugitives namely Samuel Kimuchu Gichuru and Chrysanthus Barnabus Okemo (the respondents), expressed no objection to the said request. He proceeded to authorize the Chief Magistrate to issue a warrant for arrest and detention of the respondents in accordance with Section 8 of the said Act. It is this letter that triggered the proceedings in Nairobi (Milimani) Chief Magistrate’s Miscellaneous Application No. 9 of 2011, the subject of this revision. The proceedings were commenced before the Principal Magistrate Mrs. G. W. Ngenye Macharia. In the said proceedings Mr. Patrick Kiage led a team of state counsel on behalf of the applicant while Mr. Fred Ngatia appeared for the respondents.
3. The respondents, however, raised preliminary issues to the said proceedings. After Mr. Ngatia, learned counsel for the respondents had completed his submissions in respect thereof and it was the turn of Mr. Kiage, learned counsel for the Republic to respond, Mr. Ngatia raised an objection to the effect that as a stay had been granted in High Court Miscellaneous Criminal Application No. 435 of 2011 between Henry Kiprono Kosgey and Director of Public Prosecutions & Another, Mr. Kiage could not purport to carry out duties as if no such decision had been made. He accordingly argued that the matter cannot be conducted by a person who has no status to appear before the court and that the continued participation of Mr. Kiage would vitiate the proceedings and compel a repetition of the case. In the course of the arguments, the learned trial magistrate directed that Mr. Kiage addresses the court on his mandate conferred upon him by the Director of Public Prosecutions (DPP) to specifically prosecute the matter.
4. After listening to the submissions of both parties, by her ruling dated 22ndNovember 2011, the learned trial magistrate while conceding that the objection raised by Mr. Ngatia in so far as it was based on the High Court decision was unmerited since it did not give a blanket stay against Mr. Kiage to prosecute in any other matter, found that she could not base her decision on speculation that the said application would proceed without a specific order barring Mr. Kiage from prosecuting the matter before her.
5. With respect to the second issue, the learned judge found that under section 85 of the Criminal Procedure Code (the Code) it is mandatory that a person so appointed as a special Public Prosecutor to conduct the duties spelt out thereof, be gazetted and the purpose of publishing the name of such a person is to legally delegate those powers and so conform with the law. According to the learned magistrate, it mattered not whether Mr. Kiage was appointed by the Public Service Commission or as an advocate of the High Court, as his appointment as a Special Public Prosecutor should be gazetted followed by an administrative appointment. As Mr. Kiage’s term as a Deputy Public Prosecutor expired after one year’s contract from 15th February, 2007, without following the procedure laid down in section 85 of the Code (i.e. gazettement) the court proceeded to find:
   • that Mr. Kiage was not properly appointed under the law to act as a special Public Prosecutor in those proceedings;
   • that Mr. Kiage had no locus henceforth to appear before the Court in the same proceedings unless appointed pursuant to section 85 of the Code;
   • that the submissions which Mr. Kiage made in response to the Respondent’s submissions in support of the objection to the extradition proceedings be expunged from the court record; and
   • that the DPP should appoint another prosecutor/state counsel to lead in submissions on his behalf beginning the 28th November 2011.
6. It is the foregoing decision that provoked this revision.
7. The court held:

“…Looking at the larger picture, it is my considered view that it would be a travesty of justice to hold that all the actions taken by Mr. Kiage prior to the raising of the objection should be expunged. Whereas I find that there was an irregularity in his appointment the Court must weigh the consequences of nullifying his actions against the prejudice alleged. The only prejudice that the respondents stand to suffer is that they may be subjected to a second trial if it turns out that the trial was conducted by a person who was not legally empowered to do so. However, the irregularity in gazettement of Mr. Kiage, in my considered view, though deplorable, is in the peculiar circumstances of this case curable under Article 159(2) (d) of the Constitution.
In the result whereas I do not agree that the learned trial magistrate’s holding that “Mr. Kiage has no locus to henceforth appear before the court in the proceedings before the subordinate court unless appointed as stipulated under section 85 of the Criminal Procedure Code” was incorrect or unprocedural or illegal, I am not prepared to sustain the finding that the submissions which Mr. Kiage made in response to the Respondent’s submissions in support of their objection to the extradition proceedings should be expunged from that record. In other words the irregularity was not, in my view, so grave as to justify the drastic step of expunging the said submissions and I so hold.
Accordingly, the record of the subordinate court is hereby directed to be corrected in accordance with the directions hereinabove.”
Thuita Mwangi & 2 Others v. Ethics & Anti-Corruption Commission & 3 Others [2013] eKLR

1. The matter involved consolidation of two Petitions, Petition Nos. 153 of 2013 and 369 of 2013. The matter relates to the purchase of some property in Tokyo, Japan for the Kenyan Embassy premises by the Ministry of Foreign Affairs (“the Ministry”).
2. The Petitioners wanted the court to intervene and stay criminal proceedings being undertaken against the Petitioners, then officials in the Ministry over the purchase of the property in which it was claimed that the purchase process flouted procurement rules and that the Kenyan Government lost colossal sums of money in the transaction.
3. The case in point is Anti-Corruption Case No. 2 of 2013, Republic v. Thuita Mwangi, Anthony Mwaniki Muchiri and Allan Mburu (“the Criminal Case”) lodged in the Nairobi Chief Magistrates’ Court on 28th February 2013 in which the petitioners are charged with various counts of offences relating to corruption and abuse of office. The charges facing the Petitioners were:
   • Count I
   • The first count was conspiracy to commit an offence of corruption contrary to section 47A (3) as read with section 48(1) of the Anti-Corruption and Economic Crimes Act, 2003.
   • The particulars of the offence were that Thuita Mwangi, Anthony Mwaniki Muchiri and Allan Mburu on diverse dates between January, 2009 and October 2009, at the Ministry of Foreign Affairs, Nairobi, within Nairobi Province, being the Permanent Secretary and the Charge D’Affairs, Ministry of Foreign Affairs and the Kenya Embassy Tokyo, respectively, jointly with another not before court conspired to commit an offence of corruption namely, breach of trust by approving the purchase of the property known as 3-24-3 Yakumo Meguro-Ku in Tokyo for the Chancery of the Kenya Embassy and Ambassador’s residence at a price of 1.75 billion Japanese Yen while aware that a fair market price could have been obtained had proper procurement procedures been adhered to.
   • Count II
   • The second count was abuse of office contrary to section 46 as read with section 48(1) of the Anti-Corruption and Economic Crimes Act, 2003
   • The particulars of the offence were that Thuita Mwangi and Allan Mburu on or about the 30th day of June, 2009 at the Ministry of Foreign Affairs, Nairobi within Nairobi Province, being the Permanent Secretary and Charge D’Affairs, Ministry of Foreign Affairs and the Kenya Embassy Tokyo, respectively jointly with another not before court used their offices to improperly confer a benefit of 318,700,000 Japanese Yen to Mr. Nobuo Kuriyama for the purchase of the property known as 3-24-3 Yakumo Meguro-Ku in Tokyo for the Chancery of the Kenya Embassy and Ambassador’s residence, being the difference between the actual price paid of 1,750,000,000 Japanese Yen and 1,431,300,000 Japanese Yen being the value assessed by the Government of Kenya Valuer.
   • Count III
   • The third count was willful failure to comply with the law and applicable procedures relating to procurement contrary to section 45(2) (b) as read with section 48(1) of the Anti-Corruption and Economic Crimes Act, 2003.
   • The particulars of the offence were that Thuita Mwangi, Anthony Mwaniki Muchiri and Allan Mburu on diverse dates between January 2009 and October, 2009, at the Ministry of Foreign Affairs Nairobi, within Nairobi Province, being the Permanent Secretary and the charge D’Affairs, Ministry of Foreign Affairs, Kenya and the Tokyo Kenya Embassy, respectively, being officers whose functions concern the use of public revenue, jointly and willfully failed to comply with the applicable law and procedures relating to procurement of real property, to wit, sections 50 of the Public Procurement and Disposal Act, 2005, and Regulation 35 of the Public procurement and Disposal Regulations, 2006, by directly purchasing the property known as 3-24-3 Yakumo Meguro-Ku in Tokyo the Chancery for the Kenya Embassy and Ambassador’s residence in contravention of the said procurement procedures.
   • Count IV
   • The fourth count was false assumption of authority contrary to section 104(b) of the Penal Code as read with section 34 of the Penal Code.
   • The particulars of the offence were that Allan Mburu on or about 30th day of June 2009, at the Kenya Embassy in Tokyo, Japan, being the Charge D’ Affairs, without authority signed a contract for the purchase of the property known as 3-24-3 Yakumo Meguro-ku in Tokyo for the Chancery of the Kenya Embassy and Ambassador’s residence, an act he was not authorized by the law to do.
4. The court held:
   • “…The petitioners in this case alleged that the institution of the criminal proceedings was done in bad faith and for ulterior motives. The petitioners have however fallen short of demonstrating that the proceedings were instituted for other purpose other than enforcement of the law, or otherwise an abuse of the court process. From the evidence before me, I am unable to arrive at such a conclusion.
   • In the case of Kuria & 3 others v Attorney General [2002] 2 KLR 69, it was observed as follows at pages 79, 80;“There should be concrete grounds for supposing that the continued prosecution of a criminal case manifests an abuse of the judicial procedure, much that the public interest would be best served by the staying of the prosecution. In the instant case, the applicants have stated that there is an abuse of the process of the court by the AG. Several allegations have been levelled against the state that there is selective prosecution, that there is harassment of the applicants and pressure from the state to settle the civil dispute… I have not seen any evidence of these allegations made against the state. There is no evidence of malice, no evidence of unlawful actions, no evidence of excess or want of authority no evidence of harassment or intimidation or even manipulation of court process so as to seriously deprecate the likelihood that the applicants might not get a fair trial as provided under section 77 of the Constitution…..There is need to show how the process of the court is being is being used or misused. There is a need to indicate or show the basis upon which the rights of the applicant are under serious threat of being undermined by the criminal prosecution……..The effect of a criminal prosecution on an accused person is adverse, but so also are their purpose in the society, which are immense. There is a public interest underlying every criminal prosecution, which is being zealously guarded, whereas at the same time there is a private interest on the rights of the accused person to be protected, by whichever means… Given these bi-polar considerations, it is imperative for the court to balance these considerations vis-à-vis the available evidence…However, just as a conviction cannot be secured without any basis of evidence, an order of prohibition cannot also be given without any evidence that there is manipulation, abuse or misuse of the court process or that there is a danger to the right of the accused person to have a fair trial.”
   • For the reasons I have outlined, I am unable to grant the orders sought and accordingly, the consolidated Petitions be and are hereby dismissed. In the circumstances, each party shall bear its own costs”.

International best practices in public finance

International best practices in public finance arise from the development of sound institutional framework to ensure that there are sound budget procedures and accountability mechanisms to maintain spending within the limits and allocations established by the budget; and citizens are well informed about the budget process, the rate at which revenue is spent, and the composition of the spending.
Some of the best practices in public financial management include:

• Strengthening public financial management as a tool for good financial governance
  • Good financial governance is the responsive, prudent, effective, transparent and accountable management of public resources and requires robust budget and financial management, audit and oversight institutions that operate within the law.
  • Better mobilization of resources is required to create a culture of government accountability to the citizen taxpayer, diversify and make more effective public finance, enable long-term financial commitments to citizens and reduce dependence on aid flows.
  • Effective public financial management is instituted within the local context (country specific) by ensuring that there are relevant laws and national institutions which appreciate good practices in PFM reforms from other jurisdictions and manage knowledge on how to sustain reforms in their own countries.
• Enhancing Skills to achieve better public financial management
  • For effective public financial management, each country should have the relevant bodies with competent managerial and technical staff capacities and skills to contribute to strong financial management, the production of high quality financial information and the audit of this information.
• Fiscal transparency
  • A country should have mechanisms to ensure meaningful public budget and financial information at different stages of the budget cycle is accessible to the public, with due attention to quality, usefulness and timeliness. Effective financial controls ensure that financial resources are being recorded and used in the right way, for the right purpose, and at the right time.
• Improving accountability through oversight
  • Legislators, civil society organizations and members of the public take on a proactive role in discussing collection and expenditure of revenue by the government; and the budgeting process.

International benchmarking in public finance

According to the Global Competitiveness Index 2014-2015 rankings, New Zealand, United Kingdom and South Africa have been listed as among the best performing countries in the world economic-wise.
The countries are listed according to the following 12 pillars: (i) institutions; (ii) infrastructure; (iii) macroeconomic environment; (iv) health and primary education; (v) higher education and training; (vi) good market efficiency; (vii) labor market efficiency; (viii) financial market development; (ix) technological readiness; (x) market size; (xi) business sophistication; and (xii) innovation.

• New Zealand

Parliament is the supreme law-making authority and provides authority for all governmental activities in New Zealand. One of the means by which the Parliament scrutinizes the Government is through section 22 of the Constitution Act, 1986 which provides that it is not lawful for the Crown to levy a tax, borrow money, or spend public money except by or under an Act of Parliament.
Reasons why New Zealand is performing well in public financial management

1. The Public Finance Act, 1989 provides a core legislative framework on how the Government can borrow money or spend public money. The key highlights of the Act governing the use of public financial resources include:
   • providing a clear framework for parliamentary authorization and scrutiny of Government’s expenditure proposals and management of government’s assets and liabilities;
   • providing clear lines of responsibility for effective and efficient management and use of public financial resources;
   • providing principles for responsible fiscal management in the conduct of fiscal policy and require regular reporting on the extent to which the Government’s fiscal policy is consistent with those principles;
   • providing for minimum financial and non-financial reporting obligations for Ministers, Departments and Offices of Parliament;
   • providing for application of financial management incentives and for the accountability of specified central government organizations; and
   • safeguarding public assets by providing statutory authority and control for the borrowing of money, issuing securities, use of derivative transactions, investment of funds, operation of bank account and giving guarantees and indemnities.
2. New Zealand has elaborate principles of responsible fiscal management.The Government must pursue its policy objectives in accordance with the following principles;
   • reducing total debt to prudent levels so as to provide a buffer against factors that may impact adversely on the level of total debt in the future by ensuring that, until those levels have been achieved, total operating expenses in each financial year are less than total operating revenues in the same financial year;
   • once prudent levels of total debt have been achieved, maintaining those levels by ensuring that, on average, over a reasonable period of time, total operating expenses do not exceed total operating revenues;
   • achieving and maintaining levels of total net worth that provide a buffer against factors that may impact adversely on total net worth in the future;
   • managing prudently the fiscal risks facing the Government;
   • when formulating revenue strategy, having regard to efficiency and fairness, including the predictability and stability of tax rates;
   • when formulating fiscal strategy, having regard to the interaction between fiscal policy and monetary policy;
   • when formulating fiscal strategy, having regard to its likely impact on present and future generations; and
   • ensuring that the Crown’s resources are managed effectively and efficiently.
3. The Government is only allowed to depart from the principles of responsible fiscal management if the departure from those principles is temporary and the Minister in accordance with the Act has stated the reasons for the departure from those principles; and the approach the Government intends to take to return to those principles; and the period of time that the Government expects to take to return to those principles.
4. New Zealand has Select Committees who are groups of Members of Parliament appointed by the House of Representatives to consider and report on specific issues. The Finance and Expenditure Committee (FEC) and the Government Administration Committee are the committees most directly involved in public sector financial management system. The FEC scrutinizes the forecast and year-end financial statements of the Government as a whole, monitoring performance on behalf of the House.
5. New Zealand has four other statutes which establish the legislative framework for the public sector financial management system:
   • State Sector Act, 1988 which sets out the general administrative and oversight arrangements for core government public services designed to maintain appropriate standards of integrity and conduct and support efficient and responsible management within the state sector.
   • The State-Owned Enterprises Act, 1986 which outlines the principles governing the operation of state enterprises and establishes requirements for the accountability of state enterprises and the responsibility of Ministers.
   • Fiscal Responsibility Act, 1994 which establishes the principles for formulating fiscal policy in New Zealand and requires the Government to publish regularly its short-term and long-term fiscal intentions. The Act establishes five principles of responsible financial management:
     • reducing Crown debt to a prudent level;
     • maintaining the Crown debt at a prudent level;
     • achieving and maintaining Crown net worth at a level that provides a buffer against adverse future events;
     • prudent management of fiscal risk; and
     • reasonably predictable tax rates.
   • The Public Audit Act, 2001 provides for the Controller and Auditor-General (the Auditor-General) to be an officer of Parliament and sets out the law relating to the audit of public sector organizations. The Auditor-General provides independent assurance to Parliament and the public that public sector organizations are operating and accounting for their performance in accordance with Parliament’s intentions.
6. New Zealand has three central agencies that are concerned with coordinating and monitoring public sector performance:
   • Department of the Prime Minister and Cabinet which provides advice to the Prime Minister on policy, administrative and constitutional issues, provide executive support to Cabinet and contributes to co-ordination of the Government across departments.
   • State Services Commission which is the Government’s principal adviser on public sector organizational form and strategic human resources management and its functions include advising on performance management and organizational structures, recommending departmental chief executive appointments and reviewing chief executive performance.
   • Treasury which is the principal economic and financial adviser to the Government and its functions include reporting on expenditure proposal as submitted to the Government, manage public debt, tax policy advice and review of significant policy issues affecting public resources.

Anti-Corruption Laws in New Zealand

• Crimes Act, 1961

1. The Crimes Act covers bribery in the public sector, making it an offence to corruptly accept or obtain a bribe for something done or not done in an official capacity.
2. Every Minister of the Crown or member of the Executive Council is liable to imprisonment for a term not exceeding 14 years who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, any bribe for himself or herself or any other person in respect of any act done or omitted, by him or her in his or her capacity as a Minister or member of the Executive Council.
3. Every member of Parliament is liable to imprisonment for a term not exceeding 7 years who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, any bribe for himself or herself or any other person in respect of any act done or omitted, by him or her in his or her capacity as a member of Parliament.
4. Every law enforcement officer is liable to imprisonment for a term not exceeding 7 years who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, any bribe for himself or herself or any other person in respect of any act done or omitted, by him or her in his or her official capacity.
5. Every official is liable to imprisonment for a term not exceeding 7 years who, whether within New Zealand or elsewhere, corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, any bribe for himself or herself or any other person in respect of any act done or omitted, by him or her in his or her official capacity.
6. Every official is liable to imprisonment for a term not exceeding 7 years who, whether within New Zealand or elsewhere, corruptly uses or discloses any information, acquired by him or her in his or her official capacity, to obtain, directly or indirectly, an advantage or a pecuniary gain for himself or herself or any other person.
7. Every person is liable to imprisonment for a term not exceeding 7 years who:
   1. having received personal information, being information that comes into that person’s possession as a result of the commission of an offence against section 105A; and
   2. knowing that the information has been disclosed in contravention of that section uses or discloses that information to obtain, directly or indirectly, an advantage or pecuniary gain for that person or any other person.

• Secret Commissions Act, 1910

1. The Act covers bribery offences in the private sector. It criminalizes the bribing of an agent to act in a certain way regarding the principal’s affairs or business.
2. Every person who corruptly gives, or agrees or offers to give, to any agent any gift or other consideration as an inducement or reward for doing or forbearing to do any act in relation to the principal’s affairs or business is guilty of an pffence.
3. Every agent who corruptly accepts or obtains, or agrees or offers to accept or attempts to obtain, or solicits from any person, for himself or for any other person, any gift or other consideration as an inducement or reward for doing or forbearing to do, or for having done or forborne to do, any act in relation to the principal’s affairs or business is guilty of an offence.
4. Every agent who makes a contract on behalf of his principal and fails to disclose to his principal, at the time of making the contract or as soon as possible thereafter, the existence of any pecuniary interest which the agent has in the making of the contract, unless to the knowledge of the agent the existence of such pecuniary interest is already known to his principal.
5. Every person who advises any person to enter into a contract with a third person and receives or agrees to receive from that third person, without the knowledge and consent of the person so advised, any gift or consideration as an inducement or reward for the giving of that advice or the procuring of that contract, unless the person giving that advice himself acts as the agent of the third person in entering into the contract, or is to the knowledge of the person so advised the agent of that third person is guilty of an offence.
6. A person who is convicted for committing an offence under the Act is liable to imprisonment for a term not exceeding 7 years.

An example of a corruption case in New Zealand is:
Taito Phillip Hans Field v. The Queen SC 3/2011/ [2011] NZSC 129

1. At the conclusion of his trial before Rodney Hansen J. and a jury, Taito Phillip Field was found guilty on 11 counts of corruptly accepting benefits in connection with acts carried out by him in his role as a Member of Parliament (laid under section 103(1) of the Crimes Act 1961).  He was also found guilty on 15 counts of attempting to pervert the course of justice (laid under section 117 of the Crimes Act). He was subsequently sentenced to a total of six years imprisonment. He unsuccessfully challenged in the Court of Appeal both the convictions and the sentences imposed. His appeal to the Supreme Court is confined to the convictions on the charges of corruptly accepting benefits.
2. The appellant was a Member of Parliament between 1993 and 2008.  Although he also held Ministerial office (as Associate Minister of Pacific Island Affairs, Associate Minister of Social Development and Employment, and Associate Minister of Justice) between 2003 and 2005, the charges he faced related only to his activities as a Member of Parliament. It was in this role that he came into contact with a number of Thailand nationals who faced immigration difficulties. The appellant was very knowledgeable about the way the immigration system operated and he advised them as to how they could best secure the immigration outcomes they wanted. He and his staff also wrote letters to the New Zealand Immigration Service and the Associate Minister of Immigration. As well, the appellant had a number of personal meetings with the Associate Minister. The Thailand nationals he was helping were involved in the building industry and, in the representations he made on their behalf, the appellant often stressed their expertise as plasterers, painters and tilers.  In terms of outcomes achieved, his assistance was very effective, indeed far more so than the paid assistance which they had previously obtained from immigration consultants and lawyers. The appellant started to provide this assistance in late 2002 and, on the Crown case, soon afterwards received plastering and painting services in respect of one of the houses he had an interest in. There were no charges in relation to this first round of assistance and receipt of benefits. Instead, the Crown relied on these events as the beginning of what soon became an established pattern involving the appellant providing immigration assistance and receiving, in return (as the Crown maintained and the jury must have found), plastering, painting and later tiling services. On the Crown case, this pattern of events became so settled that the appellant knew, from what had gone before, that if he provided immigration assistance the Thais he was helping would reciprocate; and this despite the absence of an express promise or bargain to that effect.
3. The relevant charges which the appellant faced covered the period September 2003 to late 2005. On the Crown case the value of the plastering, painting and tiling services the appellant received was in excess of $50,000. While that figure was disputed at trial, it was clear that the services had a substantial value.
4. The primary defence at trial was that the plastering, painting and tiling services were not provided, at least in the appellant‘s mind, in connection with, and as a reward for, the immigration assistance he provided. That defence was rejected by the jury. That rejection meant that the case was approached on the basis that when the appellant provided immigration assistance he received what he knew were rewards in the form of plastering, painting or tiling services. Given this, he must have recognized early in the piece that such assistance as he provided would, in due course, be rewarded.
5. In conclusion, the court held:

“while we are satisfied that the acceptance of gifts which are de minimis (as just explained) should not be considered corrupt under s 103(1), the acceptance of other benefits in connection with official actions is rightly regarded as corrupt irrespective of whether there was an antecedent promise or bargain. We do not accept that this approach means that the word ―corruptly- in section 103(1) is deprived of effect. In part it captures the requirement for a defendant to have acted knowingly.  In the present case, this requirement required the Crown to establish that the appellant knew that the services he received were provided in connection with the immigration assistance he gave, meaning that he knowingly engaged in conduct which the legislature regards as corrupt. As well, it is the presence in section 103(1) (and like provisions) of the word-corruptly- which permits the de minimis exception to liability which we accept exists. Because the services in this case – worth around $50,000 – were not de minimis, we are satisfied that the directions given by Rodney Hansen J to the jury were correct. They are consistent with the approach taken by Lord Cranworth and Willes J in Cooper v Slade and the subsequent leading authorities.  As well and most importantly, they are also consistent with the language of section 103, the particular statutory context in which it appears and the legislative history.”

• United Kingdom

The United Kingdom has well established principles for managing public resources which run through various organizations delivering public service. The standards expected of all public services include honesty, impartiality, openness, accountability, accuracy, fairness, integrity, transparency, objectivity and reliability.
Due to the absence of a written constitution, the power to deploy public resources are a blend of common law, primary and secondary legislation, parliamentary procedure, the duties of ministers and other long-standing practices.
Reasons why United Kingdom is performing well in public financial management

• Ministers

According to the Corporate Governance Code, the Minister in charge of a department is responsible for its policy and business as part of the broad sweep of government policy determined in the Cabinet.
The Ministerial Code requires ministers to heed the advice of their accounting officers about the proper conduct of public business. Only Ministers can propose legislation to Parliament to raise public revenue through taxation, or to use public funds to pursue their policy objectives.

• Parliament

Parliament approves proposed legislation by Ministers in order for them to carry out their policies. From time to time, Parliament also examines government activity through Select Committees which examine policies, expenditure, administration and service delivery in defined areas.
The Committee of Public Accounts examines financial accounts, scrutinizes value for money and generally holds the government and its public servants to account for the quality of their past administration. Parliament also allows finance for services when it approves each year’s estimates.

• The Treasury

Parliament looks to the Treasury to make sure that departments use their powers only as it has intended and revenue is raised, and the resources so raised spent, only within the agreed limits. The Treasury performs its functions by:

1. designing and running the financial planning system and it oversees the operation of the agreed multiyear budgets to meet ministers fiscal policy objectives;
2. overseeing the operation of the Estimates through which departments obtain authority to spend year by year;
3. setting the standards to which the central government organizations publish annual reports and accounts in the Financial Reporting Manual (FReM). This is an adaptation of the International Financial Reporting Standards to take account of the public sector context; and
4. setting accounting directions for the different kinds of central government organizations whose accounts are laid in Parliament.

• Departments

Subject to their overall control and direction of their ministers, departments have considerable freedom on how they organize, direct and manage resources at their disposal. It is for the accounting officer in each department, acting within minister’s instructions, and supported by their boards, to control and account for the department’s business. Within each department, there is adequate delegation, controls and reporting arrangements to provide assurance to the board, the accounting officer and ultimately the ministers about what is being achieved, to what standards and with what effect.

• The Comptroller and Auditor-General

The Comptroller and the Auditor General with the assistance of the National Audit Office (NAO) operate independently to help Parliament scrutinize how public funds have been used in practice.
The Comptroller and the Auditor General provide Parliament with two types of audit:

1. financial audit of the accounts of departments and arm length bodies (ALBs) covering assurance that accounts have been properly prepared and are free of material misstatements; and confirmation that the underlying transactions have appropriate parliamentary authority; and
2. value for money reports assessing the economy, efficiency and effectiveness with which public money has been deployed in selected areas of public business.

• Public Accounts Committee (PAC)

1. The PAC may hold public hearings on the accounts of central government organizations laid in Parliament. When a hearing is scheduled, the PAC normally invites the accounting officer/s of the relevant institution/s to attend as witness (es) and s/he can be accompanied by appropriate officials. An accounting officer can send a substitute where appropriate and if PAC agrees. The PAC may also invite other witnesses who may not include public servants to give insight into the background of the subject in hand. In answering questions, the accounting officer should take responsibility for the organization’s business, even if it was delegated or if the events in question happened before s/he was appointed accounting officer.
2. The PAC expects witnesses to give clear, accurate and complete evidence. If evidence is sensitive, witnesses may ask to give it in private. Witnesses may offer supplementary notes if the information sought is not at hand at the meeting.

Anti-Corruption Law in United Kingdom

The main anti-corruption law in the United Kingdom is the Bribery Act of 2010.
The Bribery Act, 2010

• One is guilty of the offence of bribery, if:
  • if s/he promises or gives a financial or other advantage to another person;
  • if s/he intends the advantage to induce a person to perform improperly a relevant function or activity including of a public nature; or to reward a person for the improper performance of such a function or activity; and
  • if s/he receives or accepts a financial or other advantage.
• No proceedings for an offence may be instituted in England and Wales except with the consent of the Director of Public Prosecutions or the Director of the Serious Fraud Office.
• An individual found guilty under sections 1 and 2 is liable:
  • on summary conviction, to imprisonment for a term not exceeding 12 months, or to a fine not exceeding the statutory maximum, or to both; and
  • on conviction on indictment, to imprisonment for a term not exceeding 10 years, or to a fine, or to both.
• A commercial organization is guilty of an offence if a person associated with it bribes another person intending to obtain or retain business for the commercial organization, or obtains or retains an advantage in the conduct of business for the commercial organization.

Corruption cases in UK include:

Smith and Ouzman Limited, Christopher Smith and Nicholas Smith Case (Chickengate Scandal) (December, 2014)

1. This involved a four-year investigation by the Serious Fraud Office (SFO) into allegations of British firms dishing out bribes codenamed ‘chicken’ to Kenyan officials to secure deals.Since the offences pre-dated the Bribery Act (the bribes were paid between November, 2006 and December, 2010), the prosecution was under the Prevention of Corruption Act, 1906.
2. SFO detectives retrieved damning e-mail exchanges between Smith and Ouzman (S&O) and Kenyan electoral and examinations officials, shipping invoices and local purchase orders (LPOs) used by the procuring entities, to put a solid case of corruption.
3. The company, Smith and Ouzman Limited, a printing firm based in Eastbourne had been awarded a contract for ballot papers. Christopher Smith was the Chairman and Nicholas Smith was the Sales and Marketing Director. The corrupt payments totalled £395,074 in relation to printing contracts which had been inflated by 38% mainly to cater for kickbacks which were made to public officials for multiple contracts awarded to the company, primarily in Kenya but also in Mauritania, with total value £2,220,520.
4. SFO’s report was then packaged into a 65-page trial affidavit and the agency picked lawyer Mr. Mark Bryant-Heron as the prosecutor to hunt down S&O executives in court. Court filings by Mr. Bryant-Heron, one of the UK’s leading attorneys in criminal fraud, provided a blow-by-blow account of how S&O wired ‘chicken’ to their local agent who then distributed it to beneficiaries.
5. Christopher Smith was found guilty and sentenced to 18 months imprisonment suspended for 2 years (he is 72 years of age), 250 hours of unpaid work and 3 months curfew. Nicholas Smith was sentenced to three years imprisonment. Both were disqualified from acting as directors of the company for six years.

Charles Owenson, James Costello, Kelvin Balmer and Brendan Cantwell (June, 2015)

• Mr. Balmer and Mr. Cantwell were directors of a construction company. Mr. Owenson and Mr. Costello were employees of Edinburgh City Council and helped the construction company win contracts for the maintenance of council properties between 2006 and 2010 in return for cash payments and extensive hospitality, including corporate seats at football matches, meals out, bar crawls and visits to lap dancing clubs. The construction company’s invoices to the council were inflated to cover these costs meaning that the council was effectively being charged for the cost of bribing its own officials.
• The offences pre-date the Bribery Act and were brought under The Public Bodies Corrupt Practices Act 1889. The sentences for imprisonment were:
  • Charles Owenson: four years and four months.
  • James Costello: three years and nine months.
  • Kevin Balmer: two years and ten months (and disqualified from acting as a company director for five years).
  • Brendan Cantwell: two years and three months (and disqualified from acting as a company director for five years).
• The sentences reiterate that the courts regard bribery as a serious offence: the amounts involved were not in themselves so significant. The directors of the construction company were found to have made cash payments of £28,387 to Mr. Owenson and £14,134 to Mr. Costello. In addition, the company spent over £30,000 in providing hospitality inducements to the two council employees. The amount by which the construction company’s invoices to the council were falsely inflated to cover the cost of these bribes was £68,910.

A case study of South Africa on public finance

1. South Africa faced immense economic challenges after the relatively smooth transition of political power in 1994 when its economy was in a very poor state. The Gross Domestic Product (GDP) was growing at 0.2% annually. Formal sector employment had declined and the apartheid government had run massive debts such that interest payments on the public debt were the largest during this period. Skilled professionals had also left the country during this political transition.
2. However, the public financial management system has undergone fundamental changes in South Africa since 1994 after the coming to power of the African National Congress (ANC). During the apartheid regime, the budgeting system was shrouded in secrecy with no open formula for fund allocation for the country. The executive was in charge of budgeting and Parliament’s role was simply “rubber-stamping”. This made it difficult to analyze and scrutinize service delivery trends. As a result, accountability and transparency suffered elements of good governance.
3. The former Department of State Expenditure and the function committees determined budget allocations. The Committees were responsible for co-coordinating budget proposal and distributed allocations for a given function. The executive thus played a major role in the budget process, particularly allocations to spending departments and parliament’s role was minimal.
4. The Constitution of the Republic of South Africa provides that the national, provincial and municipal budgets and processes must promote transparency, accountability, and effective financial management of the economy, debt and the public sector.The Constitution further states that the budgets in each sphere of government must show the sources of revenue and the way in which proposed expenditure will comply with national legislation.
5. The introduction of the Public Finance Management Act ensured that there is participative approach in budgeting process, transparency and accountability.

South Africa has established the following institutions to be in charge of public finance:

1. The Financial and Fiscal Commission which is established under the Fiscal and Commission Act of 1997 makes recommendations and gives advice to organs of state in the national, provincial and local spheres of government on financial and fiscal matters. The Commission provides advice, inter alia, about how government revenue should be shared among the various tiers of government, fiscal allocations, taxation, borrowing and the criteria to be used.
2. The Budget Council which is established under the Intergovernmental Relations Act, No.97 of 1997 ensures there is proper communication between the various spheres of government so as to encourage fiscal management regarding public finances and ensure that a culture of monitoring and evaluation of the public sector is developed.
3. The Ministers Committee on the Budget reviews the output and reports of the National Medium-term Expenditure Committees, and make recommendations to Cabinet on the division of revenue and allocation of the national share between departments.
4. Medium-term Expenditure Framework Committee is a technical committee responsible for evaluating whether the departments and their spending plans are consistent with government objectives and are economical and equitable.
5. National Treasury was formed from the merger of the national Department of Finance and National Department of State Expenditure after the democratization of South Africa in 1994. The National Treasury is responsible for promoting government’s fiscal policy framework and the co-ordination of intergovernmental financial and fiscal relations and managing the budget process.
6. Auditor-General who according to the Public Audit Act, No.25 of 2004 is mandated to ensure that the correct accounting procedures and standards are followed with regard to expenditure and revenue reported.

Anti-Corruption Laws in South Africa

• The Prevention and Combating Corrupt Activities Act, No.12 of 2004

1. The act was enacted to:
   1. provide for the strengthening of measures to prevent and combat corruption and corrupt activities;
   2. to provide for the offence of corruption and offences relating to corrupt activities;
   3. to provide investigative measures in respect of corruption and related activities;
   4. to provide for the establishment and endorsement of a Register in order to place certain restrictions on persons and enterprises convicted of corrupt activities relating to tenders and contracts;
   5. place a duty on certain persons holding a position of authority to report certain corrupt transactions; and
   6. to provide for extraterritorial jurisdiction in respect of the offence of corruption and offences relating to corrupt activities.
2. The Act provides for general offences of corruption to include any person who directly or indirectly accepts or agrees to accept or gives or offers to give any gratification from any other person to be guilty of the offence of corruption since it amounts to:
   1. the abuse of a position of authority;
   2. a breach of trust; and
   3. violation of a legal duty or a set of rules.
3. In relation to public officers, offences in respect of corrupt activities include acting, personally or by influencing another person so to act in a manner that amounts to the illegal, dishonest, unauthorized, incomplete, or biased; or misuse or selling of information or material acquired in the course of the exercise, carrying out or performance of any powers, duties or functions arising out a constitutional, statutory, contractual or any other legal obligation.
4. A public officer will be deemed to act in a corrupt way due to the following:
   1. performing or not adequately performing any official functions;
   2. expediting, delaying, hindering or preventing the performance of an official act;
   3. aiding, assisting or favouring any particular person in the transaction of any business with a public body;
   4. aiding or assisting in procuring or preventing the passing of any vote or granting any contract or advantage in favour of any person in relation to the transaction of any business with a public body;
   5. showing any favour or disfavor to any person in performing a function as a public officer;
   6. diverting, for purposes unrelated to those for which they were intended, any property belonging to the state which such officer received by virtue of his or her position for purposes of administration, custody or for any other reason, to another person; and
   7. exerting any improper influence over the decision making of any person performing functions in a public body.
5. Any person who, in order to obtain or retain a contract with a public body or as a term of such contract, directly or indirectly, gives or agree or offers to give any gratification to any other person, whether for the benefit of that other person or for the benefit of another person:
   1. for the purpose of promoting, in any way, the election of a candidate or a category or party of candidates to the legislative authority; or
   2. with the intent to influence or affect, in any way, the result of an election conducted for the purpose of electing persons to serve as members of the legislative authority is guilty of the offence of corruption.
6. Any person who induces another in procuring a tender or withdraw a tender made by a person for a contract is guilty of the offence of corrupt activities relating to procuring and withdrawal of tenders.
7. A person convicted of the above offences is liable to:
   1. in the case of a sentence imposed by a High Court, to fine or to imprisonment up to a period for imprisonment for life; or
   2. in the case of a sentence to be imposed by a regional court, to a fine or to imprisonment for a period not exceeding 18 years; or
   3. in the case of a sentence to be imposed by a magistrate’s court, to a fine or imprisonment for a period not exceeding five years.
8. Any public officer who acquires or holds a private interest in any contract, agreement or investment emanating from or connected with the public body in which he or she is employed or which is made on account of that public body, is guilty of an offence.The person is liable to:
   1. in the case of a sentence imposed by a High Court or a regional court, to a fine or to imprisonment for a period not exceeding 10 years; or
   2. in the case of a sentence to be imposed by a magistrate’s court, to a fine or to imprisonment for a period not exceeding three years.

Public Finance Management Act, No.1 of 1999

1. The Act provides for measures to deal with corruption in the procurement context in the public sector. Furthermore, it holds government officials accountable for unauthorized, and fruitless or wasteful expenditure.
2. The National Treasury may make regulations or issue instructions applicable to all institutions to which the Act applies concerning:
   1. financial management and internal control;
   2. the determination of a framework for an appropriate procurement and provisioning system which is fair, equitable, competitive and cost effective; and
   3. internal audit components and their functioning;
3. The Act under the Treasury Regulations made pursuant to Section 76 of the PFM Act provides for the following provisions which deal with corruption:
   1. in order to avoid abuse of supply chain management system, the accounting officer or authority must investigate any allegations against an official or other role player of corruption, improper conduct or failure to comply with the chain management system, and when justified to take steps to inform the relevant treasury or report to the South African Police Service.The accounting officer is expected to reject a proposal for the award of a contract if the recommended bidder has committed a corrupt or fraudulent act in competing for a particular contract;
   2. the National Treasury and each provincial Treasury is expected to establish mechanism to make recommendations for remedial actions to be taken for non-compliance of any norms and standards established, including recommendations of criminal steps to be taken in the case of corruption, fraud or other criminal offences; and
   3. the audit committee which is established by the accounting authority of a public entity is expected to report through its chairperson to the relevant executive authority and the Auditor-General any fraud detected, corruption or gross negligence.

Municipal Finance Management Act, No.56 of 2003

1. The Act was enacted to:
   • secure sound and sustainable management of financial affairs of municipalities and other institutions in the local sphere of government; and
   • to establish Treasury norms and standards for the local sphere of government.
2. The acts has the following provisions to deal with corruption:
   • Section 112(1) (m) provides that the supply chain management policy of a municipality or municipal entity must be fair, equitable, transparent, competitive and cost-effective and comply with a prescribed regulatory framework for municipal supply chain management, which must have measures for combating corruption, favouritism and unfair and irregular practices in municipal supply chain management. Furthermore, a person is barred from participating in tendering or other bidding processes, including persons who were convicted for fraud or corruption during the past five years;
   • Section 115(1)(b) provides that the accounting officer of a municipality or municipal entity must take reasonable steps to ensure proper mechanisms and separation duties in the supply chain management system are in place to minimize the likelihood of fraud, corruption, favouritism and unfair and irregular practices; and
   • Section 173 provides that the accounting officer of a municipality is guilty of an offence if that accounting officer fails to take all reasonable steps to prevent corruptive practices in the management of the municipality’s assets or receipt of money; or in the implementation of the municipality’s supply chain management.
3. The Act provides protection to whistleblowers in relation to reporting corrupt activities at their respective work places to authorities.

Protected Disclosures Act, No.26 of 2000

1. The Act was enacted to:
   1. To protect an employee, whether in the private or the public sector, from being subjected to an occupational detriment on account of having made a protected disclosure;
   2. To provide certain remedies in connection with any occupational detriment suffered on account of having made a protected disclosure; and
   3. To provide procedures in terms of which an employee can, in a responsible manner, disclose information regarding improprieties by his or her employer.
2. Occupational detriment according to the Act means the following:
   1. subjecting the employee to any disciplinary action;
   2. dismissing, suspending, demoting, harassing or intimidating the employee;
   3. transferring the employee against his or her will;
   4. refusing to transfer or promote the employee;
   5. subjecting the employee to a term or condition of employment or retirement which is altered or kept altered to his or her disadvantage;
   6. being refused a reference or being provided with an adverse reference from his or her employer;
   7. being denied appointment to any employment, profession or office; and
   8. being otherwise adversely affected in respect of his or her employment, profession or office, including employment opportunities and work security.
3. An employee who is subjected to occupational detriment can approach any court having jurisdiction for the appropriate remedy.
4. Any disclosure made to a member of the Cabinet or Executive Council of a province is protected disclosure if the employee’s employer is:
   1. an individual appointed in terms of legislation by a member of Cabinet or Executive Council of a province; or
   2. a body, the members of which are appointed in terms of legislation by a member of Cabinet or Executive Council of a province; or
   3. an organ of state falling within the area of responsibility of the member concerned.
5. Any disclosure made in good faith to the Public Protector or Auditor-General or a person or body prescribed in respect of which the employee concerned reasonably believes that:
   1. the relevant impropriety falls within any description of matters which, in the ordinary course are dealt with by the person or body concerned; and
   2. the information disclosed, and any allegation contained in it, are substantially true, is protected disclosure.

Financial Intelligence Centre Act, No.38 of 2001

1. The Act deals with money laundering which is an activity likely to have the effect of concealing or disguising the nature, source, location, disposition or movement of the proceeds of unlawful activities or any interest which anyone has in such proceeds.
2. The principal objectives of the Centre is to:
   1. assist in the identification of the proceeds of unlawful activities and the combating of money laundering activities and the financing of terrorist and related activities;
   2. make information collected by it available to investigating authorities, the intelligence services and the South African Revenue Service to facilitate administration and enforcements of the laws of the Republic; and
   3. exchange information with similar bodies in other countries regarding money laundering activities and similar offences.
3. The Act establishes the Money Laundering Advisory Council with the following functions:
   1. advising the Minister on policies and best practices to identify the proceeds of unlawful activities and to combat money laundering activities;
   2. advise the Centre concerning the performance by the Centre of its function; and
   3. act as a forum in which the Centre, associations representing categories of accountable institutions, organs of the state and supervisory bodies can consult one another.
4. The Act is intended to prevent the proceeds of corrupt activities being used for other purposes other than for which the public money was intended for in the first place.

The major corruption case in South Africa involved the arms deal scandal discussed below.
Schabir Shaik, Nkobi Holdings (Pty) Ltd, Nkobi Investments (Pty) Ltd, Kobifin (Pty) Ltd, Kobitec (Pty) Ltd, Proconsult (Pty) Ltd, Procon Africa (Pty) Ltd, Kobitec Transport Systems (Pty) Ltd, Clegton (Pty) Ltd, Floryn Investments (Pty) Ltd, Chartley Investments (Pty) Ltd v. The State CCT 86/06 (The Arms Deal Case)

1. This was an application for leave to appeal to the Constitutional Court of South Africa against the decision of the Supreme Court of Appeal. It emanated from the criminal proceedings in the Durban High Court in which Mr. Schabir Shaik, a businessman, and the companies represented by him (the second to the eleventh corporate applicants) were the accused. Mr. Shaik was convicted on two counts of corruption and one of fraud on June2, 2005. An effective sentence of 15 years imprisonment was imposed, being the minimum sentence in terms of section 51(2)(a)(i) of the Criminal Law Amendment Act (Amendment Act).  The corporate applicants were convicted of various counts of corruption and fraud, and sentenced to the payment of fines in varying amounts.
2. On application by the State, the High Court subsequently granted confiscation orders against certain property of the applicants that was considered to be the proceeds of unlawful activity in terms of section 18 of the Prevention of Organized Crime Act (POCA).
3. All the applicants applied for leave to appeal to the High Court against the convictions and sentences imposed, as well as against the confiscation orders. The High Court refused leave to appeal to some of the applicants and granted limited leave to others.
4. The applicants then applied to the Supreme Court of Appeal for leave to appeal against the adverse decisions and orders of the High Court where leave to appeal had been refused by the High Court and where the High Court had granted limited leave. The application was to broaden the leave to appeal.
5. The Supreme Court of Appeal issued a preliminary order granting further leave to appeal on some grounds, dismissing leave to appeal on other grounds and setting the remaining applications for leave to appeal down for oral hearing.
6. The Supreme Court of Appeal gave judgment on November 6, 2006 in which it dismissed all of the applications for leave to appeal, and all of the appeals in the criminal matter. It partially upheld the appeal against the High Court’s confiscation orders.
7. The criminal convictions concerned three related elements of the applicants’ relationship with Mr. Jacob Zuma (Mr. Zuma). The first count was a general charge of corruption in terms of section 1(1) (a) of the Corruption Act 94 of 1992. Central to the convictions on this count was the High Court’s finding that the applicants had, from October 1995 to September 2002, corruptly made certain payments to Mr. Zuma, the object being to influence him to use his name and political influence for the benefit of Mr. Shaik and his business enterprises. At the time the payments were made, Mr. Zuma was, from October 1995 to mid-1999, the Member of the Executive Council for Economic Affairs and Tourism in KwaZulu-Natal and then subsequently, from mid-1999 onwards, the Deputy President of the Republic of South Africa and leader of Government business in Parliament. The second count was one of fraud. The High Court held that these payments had been fraudulently written off in certain accounting records of the corporate applicants. Finally, the third count was also one of contravening section 1(1)(a)(i) of the Corruption Act and related to a specific payment to Mr. Zuma. The first alternative charge to count three was of money laundering in contravention of sections 4(a) and (b) of POCA. The High Court held that Mr. Shaik had conspired with a local director of a French company, Thomson-CSF (Pty) Ltd (later on changed name to Thint)-Mr. Alain Thétard (Mr. Thétard), to offer payment to Mr. Zuma in exchange for his authority and influence, to protect and promote Thint in the so-called “arms deal”. The arrangement was accepted and confirmed by an encrypted fax which was sent by Mr. Thétard to Thomson’s head office in Paris. The fax was admitted as evidence by the High Court.
8. Thint was originally indicted in the criminal matter. However, pursuant to an agreement concluded between it and the National Director of Public Prosecutions (NDPP), the charges against Thint were withdrawn before it was required to plead. The agreement provided that Mr. Thétard would provide evidence for the State pertaining to his authorship of the encrypted fax in exchange for withdrawal of the charges against Thint and Mr. Thétard.
9. The applicants now sought leave to appeal to the Constitutional Court against the decision of the Supreme Court of Appeal. When the matter was set down for hearing, the directions issued by the Chief Justice required the parties to address the application for leave to appeal only.
10. The application was in two parts. The first, was directed at the criminal proceedings based on the contentions that the rights of the applicants to a fair trial, equality and dignity had been infringed. The sentences imposed were also being challenged. This was referred to as the part of the application as the “criminal proceedings”. The second part was concerned with the orders for the confiscation of the assets of the first to the third applicants and was referred to as the “POCA proceedings”.
11. The applicants’ further contentions were general and Mr. Shaik’s claimed his constitutional rights had been violated. Firstly, he contended that the sentencing was irregular, which is a violation of the right to freedom and a fair trial. Secondly, section 35(3) (n) of the Constitution entitles him to the benefit of the least severe of prescribed punishments since the punishment changed after the date on which the offence was committed. Thirdly, the rule of law was violated by the retrospective application of the Amendment Act. Fourthly, there was an erroneous application of the law. Finally, there was a perception that justice had not been done to the first applicant as regards to the sentence.
12. In response, it was pointed out by the State that the applicants’ contentions are not only bad in law but contain averments that are factually incorrect. More specifically, the applicability of the minimum sentence legislation had, according to the State, been addressed in argument before the High Court. Further, the indictment quite clearly alleged that count one was a continuous offence that had been committed between October 1995 and September 2002. Furthermore, in the Supreme Court of Appeal, the applicants conceded that the corruption conviction fell within the provisions of section 51(2)(a) of the Amendment Act, as the payments made during the period May 1998 to September 2002 amounted to more than the statutory threshold of R500 000.
13. It was clear that the charge of corruption concerned the giving of benefits to Mr. Zuma over a period of time that extended both before and after commencement of the Amendment Act. The corruption was an ongoing offence. The acts of corruption that followed the first could not be said to have gone to the nature and extent of the offence; each act constituted an offence of corruption and together they resulted in the first charge of corruption. It was not in dispute that the offences that were committed after the commencement of the Amendment Act amounted to the statutory threshold of R500 000. In this light it was not of material significance that there were acts of corruption committed prior to the Amendment Act that were included in the same charge. If anything, these other offences provided additional reasons for not invoking section 51(3)(a) of the Amendment Act. There was therefore no logical reason why the minimum sentence legislation could not apply to the first applicant. The Constitutional court found the applicants’ contentions on this ground bore no prospects of success.
14. As far as the fines imposed on the rest of the applicants were concerned, there was nothing to warrant any interference with the sentences imposed. There was therefore no prospect of success on appeal. Accordingly, it was not in the interests of justice for the appeal on sentence to be heard by the Constitutional Court. The application for leave to appeal against the sentences was dismissed.
15. The application for leave to appeal against the confiscation orders raises a constitutional matter in that section 25 of the Constitution provided that no one may be arbitrarily deprived of his or her property. The issues raised in the application involved the interpretation of legislation in conformity with the Constitution and this was always a constitutional issue. This aspect of the appeal was not in dispute, and was acknowledged by the State as raising a constitutional issue. The only issue would therefore be the question whether it was in the interests of justice for this part of the application to be granted.
16. As indicated above, the applicants raise three issues in relation to the POCA proceedings. First, they sought to introduce new facts that had not been raised before; second, they raised the question whether Mr. Zuma’s intervention was the cause of the acquisition of certain benefits or assets and third, they raised a challenge against the decisions of the Supreme Court of Appeal and the High Court based on considerations of proportionality between the offence and the value of the property that was confiscated.
17. The Constitutional court considered the submissions before them and found that they cannot be said to bear no reasonable prospects of success. They therefore deemed it to be in the interests of justice for the application for leave to appeal against the confiscation orders made by the Supreme Court of Appeal to be granted.
18. In conclusion, the Constitutional Court found that the application for leave to appeal against the applicants’ criminal convictions and the sentences imposed must fail. The application for leave to appeal against the confiscation orders was to succeed.

Does Kenya measure up to these jurisdictions?

Kenya has tried to measure up to New Zealand, United Kingdom and South Africa in the following ways:

1. Promulgation of a new Constitution on 27th August, 2010 and enactment of the PFM Act, Cap.412C which create provisions dealing with public finance.
2. Some oversight institutions have been reorganized and new independent constitutional offices created by splitting the control function of the Controller and Auditor-General (CAG) into two, i.e., the Controller of Budget (COB) and the Auditor-General.
3. The Constitution of Kenya, 2010 has extended the role of the COB to monitor budget execution and report on a quarterly basis to Parliament.
4. The Controller of Budget and the Auditor-General are expected to assure Kenyans that public resources are safeguarded from misuse and above all employed efficiently and effectively for the benefit of all Kenyans.
5. Fiscal decentralization with county governments being empowered to decide on the use of resources allocated to them.
6. The establishment of the Commission on Revenue Allocation which is mandated to oversee the allocation of revenues between national and county governments and advise the legislature.
7. To safeguard the autonomy of county governments and consolidate fiscal decentralization, the Constitution establishes a Senate and county assemblies as key institutions on matters of county finance.
8. The Constitution provides provisions for enhanced transparency and expenditure controls which include the power to withhold the transfer of funds to counties that engage in persistent breaches of financial resources. For Parliament to support the decision to withhold up to 50% of the funds to counties, the COB must present a report on the matter to Parliament and the county must be given an opportunity to defend itself.Thus, the Constitution has in-built sanctions, which if enforced effectively can lead to improvements in public finance management, enhancing service delivery.
9. The Constitution provides for greater legislative scrutiny and transparency in borrowing. This includes reporting requirements, Cabinet Secretary to present details of loans and guarantees to a House Committee, intended use of debt resources and debt services; and reports of progress on loan repayments.
10. The Government is required to publish an annual report on all loan guarantees within two months after the end of the fiscal year, a measure which is bound to be of great benefit to Kenyan taxpayers who bear a heavy burden for irregularly procured debts. In particular, making borrowing by state corporations subject to mandatory reporting and parliamentary oversight is bound to improve their financial performance.

Despite having a Constitution establishing constitutional offices to safeguard public expenditure and a PFM Act which is supposed to provide effective management of public finances by the national and county governments, the country still lags behind due to lack of goodwill in public financial matters in the following ways:

1. Impunity; there are so many instances where leaders dip their fingers into the public till and still continue holding public offices.
2. Oversight gap; the belief, among those squandering public resources, that they are unlikely to be caught or even punished if found.
3. Cronyism; the apparent inability of political leaders to take firm actions against offenders. If anything, the leaders bend over backwards to save their colleagues.
4. Insufficient public activism; lack of public or citizen anger, which could deter looters of public resources.

Further to the above, Article 114 of the Constitution of Kenya, 2010, gives the National Assembly authority to introduce, amend and alter money bills. The National Assembly can move motions that have financial or fiscal implications including matters related to contracting public debt.
However, the National Assembly is facing challenges in undertaking its roles effectively because:

1. Kenya has a highly fragmented political party system, which makes it difficult for MPs to agree on crucial matters of policy or principle;
2. many MPs have limited knowledge on many technical issues, especially public finance; and
3. politicians have a tendency to pay more attention to self and vested interests, which may compromise national interests.

Scandals that have recently rocked Kenya in relation to public finance include:

1. The Ministry of Devolution and Planning has been rocked with a corruption scandal relating to the National Youth Service squandering Kshs.791 million.A report presented to the Public Accounts Committee had shown that the Ministry had procured some goods at exorbitant prices. The Government is also being challenged by the opposition to appoint an independent international audit firm to look into the transactions, accounts, tender procurement and payment by NYS since 2013.The Director of Public Prosecutions has ordered the prosecution of the Principal Secretary, Mr. Peter Mangiti, and the NYS Director General, Mr. Nelson Githinji, who has since stepped down to pave way for investigations. According to the opposition leader, Mr. Raila Odinga, the Cabinet Secretary, Ms. Anne Waiguru, who has since resigned, ought to be held accountable for the misappropriation of the funds since President Uhuru Kenyatta through a Cabinet meeting at State House, Nairobi on December 2, 2014 passed two resolutions to the effect that:
   • Cabinet Secretaries had oversight role in sanctioning procurement ; and
   • Cabinet Secretaries to lead major transformation strategic initiatives in their Ministries including approval and attainment of targets and managing integrity and accountability matters.
2. Kenya floated the US$2.75 billion (Kshs.289 billion) Eurobond in the Irish Stock Exchange in 2014 with the intention that it will stop government borrowing from the domestic market, thereby driving down the interest rates which will in turn boost investment and spur economic growth. However, the situation in 2015 has not changed and the bank interest rates are the highest in more than a decade, inflation has gone up and the issue of investing the Eurobond funds in mega projects has gone silent. The government has now resorted to borrowing from the domestic market as was previously through syndicated loans from banks to reduce the deficit of Kshs.600 billion in the 2015/2016 Budget. More intriguing is the fact that $2 billion (Kshs.176 billion) received in June, 2014 from the floating of the Eurobond was not deposited in the Consolidated Fund account. The funds were deposited in an offshore account contrary to Article 206 of the Constitution of Kenya and Section 17(2) of the Public Finance Management Act, Cap.412C which requires that all the money raised received by or on behalf of the national government be paid to the Consolidated Fund. This is according to the Auditor-General, Mr. Edward Ouko’s report who expressed fears that the proceeds risk being appropriated without the authority of the Controller of Budget for purposes other than those for which the Bond was floated for.
3. Payment of Anglo Leasing fraudulent transactions was authorized by President Uhuru Kenyatta in 2014 which places a burden on the Kenyan taxpayer since it involved non-delivery of goods and services and massive overpricing. In May, 2014, Kenya paid off two claims to the tune of Kshs.1.43 billion (US$16.8 million) to First Mercantile Securities Corporation and Universal Satspace Corporation which had managed to obtain judgment on the Anglo Leasing promissory notes in London and Geneva respectively. The Anglo Leasing Affair related to contracts being award to phantom firms and its revelation in 2004 shocked Kenyans. The tender was not publicly advertised and the procurement process was flouted, and details were only leaked to the media by Mr. John Githongo. Anglo Leasing Finance was supposed to supply the Kenyan government with a system to print new high-technology passports while other fictitious companies in the scam were to supply forensic laboratories. None of the contracts was ever honoured.
4. The National Youth Development Fund under the Ministry of Devolution and Planning has been hit with another scandal after suspicious transactions were flagged down by the Banking Fraud Unit. It had emerged that the Fund’s documents were forged and used to transfer between Kshs.180 to Kshs.200 million to an account belonging to Quondum Ltd. Further, the Fund cannot account for Kshs.400 million deposited in a fixed deposit account. The Fund Chief Executive Officer, Ms. Catherine Namuye, has since been suspended pending further investigations.

• Recommendations

Kenya needs to improve in the following areas in order to have an effective public financial management system:

1. Improve on the collection of revenue by the Kenya Revenue Authority and curb tax leaks as was recently reported where KRA failed to meet its revenue projections by Kshs.11.4 billion from custom taxes including tax on imports, import declaration fees and the railway development levy. Kenya as a country cannot run properly without sufficient revenue and reliance on external borrowing which places a huge burden on the Kenyan taxpayers.
2. Effective planning and allocation of resources is key and the government should develop and institutionalize planning processes at all levels of government. The budgeting process must be transparent and inclusive both at the national and county level by ensuring effective public participation by creating awareness among the citizens.
3. Effective oversight and monitoring will be crucial to sound governance and PFM. A well-functioning PFM system must have clear rules on transparency and reporting, as well as enforceable sanctions for failure. Oversight should be established by internal mechanisms in the National Treasury, as well as external oversight by bodies like independent parliamentary committees, ombudsman, a free media and civil society, and an independent Controller of Budget and Auditor-General. The relevant oversight agencies must be proactive in order to sustain the fight against corruption and not to react long after the horse has bolted. The relevant institutions should be strengthened and mechanisms put in place thus ensuring corruption or any anomalies are detected, deterred and acted upon in real time.
4. Political commitment is required to:
   • implement credible macro-economic policies;
   • cut government costs and wastages;
   • ensure an appropriate legal and enforcement environment for government policy;
   • give opposition parties a role in the oversight of PFM; and
   • ensure transparency and openness in PFM and in governance generally.

Conclusion

In conclusion, countries where proper PFM has succeeded have ensured that they have:

1. strong institutions with clear, non-contradictory legal mandate to operate effectively, as well as sufficient funding to secure the human capital they require to operate optimally; and
2. institutional independence and scrutiny by more than one party. Independence is never absolute, but institutions need to be independent within the overall strategic framework for the country and adequately resourced to achieve their specific mandate.

Kenya has the necessary laws and institutions required for effective public financial management but lack of enforcement of laws and political goodwill continues to impede progress.