Cabinet orders DCI probe after Ksh.6.2B payroll fraud uncovered in 12 State departments

The Cabinet has ordered a sweeping crackdown on payroll fraud across government after an audit uncovered suspected irregularities worth Ksh.6.2 billion in 12 State Departments, prompting criminal investigations.

The decision was made during a Cabinet meeting chaired by President William Ruto at State House, Nairobi, on Tuesday.

According to the Cabinet despatch, the reforms are intended to dismantle "deeply entrenched and decades-long payroll fraud" in government, restore integrity to the public wage bill and protect taxpayers' money through a whole-of-government payroll overhaul.

A comprehensive payroll audit found widespread weaknesses in payroll governance. A sample review of 12 out of the country's 53 State Departments revealed suspected payroll irregularities amounting to Ks.h6.2 billion, including unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions, fragmented payroll management and significant oversight gaps.

“Consequently, Cabinet directed the Directorate of Criminal Investigations to investigate payroll fraud, verify personal numbers used in payroll processing, dismantle criminal networks manipulating Government payroll systems, recover lost public funds, and ensure the immediate arrest and prosecution of all persons found culpable,” read the dispatch.

“The meeting also ordered the immediate implementation of a comprehensive payroll reform programme, including a Governmentwide audit of all remaining State Departments and public institutions, mandatory migration of all Ministries, Departments, Agencies and State Corporations onto the newly revamped Integrated Human Resource and Payroll System, enhanced cybersecurity, payroll data cleansing and validation, establishment of a disaster recovery site, and integration of payroll with other public financial management systems.”

In a separate cost-cutting measure, Cabinet froze the leasing or hiring of additional office space pending an audit of government office utilisation while directing the development of a programme to renovate public offices and improve service delivery.

The Cabinet also established a Standing Cabinet Committee on Artificial Intelligence to steer Kenya's national AI strategy, coordinate policy across government and position the country as a regional leader in the responsible development and adoption of artificial intelligence.

The committee will champion AI-driven innovation, productivity, public service delivery, job creation and inclusive economic growth while putting in place appropriate governance and safeguards.

To complement Kenya's digital transformation agenda, the Cabinet adopted the National Business Process Outsourcing (BPO) Policy to position the country as a leading global outsourcing destination by creating thousands of quality jobs for young people, attracting international investment and expanding digital employment opportunities.

The policy seeks to leverage Kenya's skilled English-speaking workforce, strategic time zone and advanced digital infrastructure to capture a greater share of the global BPO market, projected to exceed Ksh.68 trillion by 2030.

As the country braces for forecast moderate-to-strong El Niño rains later this year, the Cabinet established an Ad Hoc Cabinet Committee on El Niño Preparedness and Response, chaired by Deputy President Prof. Kithure Kindiki.

“The committee will immediately activate a National El Niño Contingency Plan covering flood mitigation, evacuation and shelter arrangements, drainage clearance, reinforcement of vulnerable roads and bridges, pre-positioning of emergency equipment and medical supplies, farmer advisories, and a contingency fund for relief, recovery and rehabilitation,” the dispatch noted.

The Cabinet further approved several strategic infrastructure projects, including the Ksh.26 billion Judicial Performance Improvement Project Phase II in partnership with the World Bank.

The project will fund the construction of a new Supreme Court complex, a dedicated Court of Appeal, a consolidated Tribunals and Judiciary Administration complex and a modern Kenya Judiciary Academy.

The meeting also authorised an additional Ksh.16.6 billion to complete the Mwache Multipurpose Dam Project in Kwale County.

Once completed, the dam is expected to supply 186,000 cubic metres of water daily to Mombasa and Kwale counties, easing chronic water shortages, supporting households and industry, expanding irrigation and strengthening climate resilience.