Auditor General report reveals how NSSF lost over Ksh.16 billion

The latest financial report by the National Social Security Fund (NSSF) for the financial year ending June 2024 has exposed significant financial misappropriation at the institution.

According to excerpts from the Office of the Auditor General on the NSSF’s financial health, the institution failed to show progress in the refund of taxes totaling to Ksh.904,336,114, which were inadvertently paid to the Kenya Revenue Authority and were to be refunded after the fund became tax-exempt — this costing retiree interest had the funds been invested.

Further, the report shows that NSSF acquired a piece of land in Nairobi's Upper Hill area at a cost of Ksh.115 million, but the parcel’s title deed was revoked in April 2010 on the grounds that the parcel was reserved for public use.

In what appeared to be a run of bad investment decisions, the Auditor General found that NSSF had invested in two companies. Between 2023 and 2024, the companies' value tanked by 17.64%, costing the members a total of Ksh.27,218,265 — from a valuation of Ksh.157,294,756 in 2023 to Ksh.127,076,491 by 2024.

The Auditor General noted that the value for money from the two companies could not be confirmed.

A situation that is also replicated in the NSSF shareholding in their investment in a loss-making bank, where the institution holds shares valued at Ksh.38,428,500, and worsened by the investment in government securities, where the fund spent Ksh.12 billion to purchase bonds — Ksh.500,711,695 premium — without satisfactory explanation.

The audit shows that bonds were bought at a premium and sold at a loss, with the years under review booking a capital loss of Ksh.272,045,067.

The audit report shows that the fund is sitting on five idle properties within Nairobi CBD valued at Ksh.4.02 billion.

But despite the demonstrably questionable investment acumen, outright investments that ought to rake in funds for the NSSF also struggled to do so in the period under review, with the report showing that, during the same period, documents provided to the Auditor General show that eight tenants owed the fund Ksh.13,973,012 in rent arrears and had obtained court injunctive orders.

To further add salt to the wound, the fund went on to spend Ksh.317,586,319 on travel, conferences and meetings, out of which Ksh.11,312,400 was spent on conferences. Of concern is that the facilities were procured through a request for quotation from non-registered suppliers.

The fund went ahead to spend Ksh.51,026,216 on motor vehicle running expenditure, with fuel accounting for Ksh.3,205,688.

In the same period under review, NSSF went on to spend Ksh.410,888,300 on renovation — out of which Ksh.14,438,945 was spent on renovation works procured through request for quotation, and an additional Ksh.36,340,392 was spent towards the acquisition of property, plants and equipment. An additional Ksh.2,080,000 was spent to acquire a reception desk.

In the period under review, NSSF also failed to meet its new membership target of 650,000, only registering 556,306, leaving a gap of 93,696, an equivalent of 14 percent underperformance.

The board of trustees did not leave empty-handed either, with the report indicating that a whopping Ksh.68,782,807 was spent as trustee emolument out of Ksh.6.9 billion (Ksh.6,950,213,769) administrative cost.