Isaac Ongiri: Kenya pays British Pensioners Sh1 Billion - The Star

House committee probes 1963 agreement

Kenyan taxpayers pay retired British civil servants Sh79 million every month, the Star has learnt.

And now the Public Accounts Committtee will be travelling to London to establish the number of pensioners, the amount each is getting and the authenticity of their claim to the pension.

The PAC team led by chairman Dr Bonnie Khalwale were surprised when they were informed by Treasury's Finance Secretary Dr Mutua Kilaka that the government had since independence been paying the pensions for retired civil servants through the Crown Agency.

Kilaka confirmed the payment and said the agreement included details as to who and how the payment was to be made.

"There is an agreement between the government and the British pensioners that has continued to influence the changes in payment rates to the pensioners," Kilaka said.

Established at the time of the British empire, the Crown Agencies became the financial institutions, supplying capital, routes for investment, and pensions to all public works and government in British dependent colonies excluding Canada or Australia.

Crown Agency was incorporated as a government mandated corporation tied to the Minister of Overseas Development, called the Crown Agents for Overseas Governments and Administration.

In 1997, the Crown Agency was privatised. As a private limited company, the CAOGA has a number of contracts to provide governmental or para-governmental services throughout the world, such as providing the Customs Services of the Government of Angola.

The Crown Agency is an organization working with the UK government and the Department for International Development, the Foreign and Commonwealth Office, revenue and customs department.

Yesterday, Kilaka said the money was being paid following an agreement which was signed between Kenya and British government at independence in 1963 when the new government committed to pay the pension of colonial era British civil servants who continued working after this date.

Kilaka could not immediately confirm the number of British nationals who were still on the government's payroll.

"We are concerned about this payment, how it's calculated and how the final value is arrived at and who is being paid,"Anyanga said.

He asked but Kilaka was unable to provide proof to show how many of the British ex-civil servants were still receiving a pension.

During this year's budget, Finance Minister Uhuru Kenyatta allocated Sh12 billion as pension for retired Kenyan civil servants up from Sh11 billion spent last financial year.

The annual spending bill on pensions by Government stood at Sh26 billion last year.

This was equivalent to 3.4 per cent of the budgeted spending of Sh760 billion for the financial year 2007/2008, way above the World Bank's recommended threshold of 2.5 per cent of the budget.

This translates to an average of Sh9,500 per month for each of the estimated 230,000 retired civil servants and teachers.

The Sh79 million being paid to the ex-British civil servants is enough to cater for 8,300 Kenyan civil service pensioners at the same rate.

Three years ago, there was a proposal in Parliament,to pay all Kenyan senior citizens regardless of whether they ever worked as public servants a monthly fee for upkeep. The proposal also suggested that taxpayers meet the medical costs of senior citizens.

However, the programme which was to be administered through the provincial administration was not enacted into law.

Yesterday Khalwale, who was accompanied by among others Nyatike MP Omondi Anyanga, said the PAC would send three of its members to London to establish the number of pensioners being paid as well as more details of the agency.

"We have a lot of questions for them, because we think someone is playing games here, we are surprised about this agreement and the amounts involved," Khalwale said.

Khalwale said it was surprising that the government continued to pay the amount and it never reduced even though many of the recipients would have died by now.

"If for example they left Kenya at 55, surely, would they still be earning a pension now?
They must have died? And why is the amount still the same? "Khalwale said.

Bonchari MP Charles Onyancha also wanted Kilaka to explain what exchange rate was used to calculate the pension. The exchange rate at the time the agreement was signed was Sh4 to the Sterling pound.

"Its amazing that an agreement reached when the value of the pound against the shilling was only four shillings can now attract millions of shillings. There is need for this contract to be made public," Onyancha said.

Kilaka explained that the amount has been increased due to fluctuations in the exchange rate. The current exchange rate is Sh124 to one Sterling Pound.

Onyancha said that the committee will demand that evidence of the existence of the beneficiaries be tabled before any further payments are made to the agency.

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