Kenya Auditor-General is under renewed legal pressure in a constitutional dispute over the handling of proceeds from the 2013/2014 Eurobond, with petitioners arguing that audit findings point to possible violations of public finance law.
The petitioners have rejected the Auditor-General defence, saying it effectively acknowledges irregularities while avoiding a clear determination on legality and accountability. At the centre of the dispute is whether billions raised through the sovereign bond were handled in line with constitutional requirements.
They argue that audit findings indicate the funds were deposited in offshore accounts instead of being remitted to the Consolidated Fund, as required under Article 206 of the Constitution and the Public Finance Management Act. According to the petitioners, this raises fundamental legal questions about how public debt is managed and accounted for.
The case also challenges the scope of the Auditor-General mandate, with petitioners insisting that all public debt must be subject to full audit oversight regardless of where it is held. They maintain that jurisdiction cannot be limited by the location of accounts or administrative arrangements.
Audit findings and constitutional obligations
The petitioners rely heavily on the Special Audit Report of April 2019, which confirmed that a significant portion of the Eurobond proceeds was held in accounts in New York rather than being channelled through the Consolidated Fund.
The report also noted that the funds could not be directly traced to specific development projects. The National Treasury described the proceeds as fungible, a classification that allows funds to be used interchangeably. Petitioners argue that this undermines claims that the Eurobond financed clearly identifiable projects approved through parliamentary appropriation.
They further contend that Article 229(6) of the Constitution requires the Auditor-General to determine whether public funds have been applied lawfully and effectively. In their view, this obligation goes beyond identifying accounting discrepancies and extends to making clear findings on legality.
The petitioners argue that the audit approach taken focused narrowly on technical accounting issues while failing to resolve the core constitutional question of whether the funds were lawfully appropriated and spent.
They also criticize the continued deferral of unresolved audit queries across multiple financial years, saying constitutional timelines require audits to be completed conclusively within defined reporting periods rather than being carried forward under ongoing reviews.
Beyond the Eurobond itself, the case raises broader concerns about transparency in Kenya public finance systems. The petitioners point to instances where certain expenditures, including those linked to security agencies, were processed outside the Integrated Financial Management Information System.
They also question the classification of some expenditures as Appropriation in Aid, arguing that such practices may indicate parallel financial processes operating outside standard oversight structures.
Despite these findings, the petitioners say the Auditor-General has not taken decisive steps to declare the questioned expenditure unlawful or to initiate accountability measures following the audit.
They have dismissed arguments for judicial restraint, insisting that the High Court has full constitutional authority to interpret state conduct and determine legality. According to them, ongoing audits or forensic reviews cannot substitute a definitive judicial ruling.
The petitioners are urging the court to make a clear determination on alleged breaches of public finance law, parliamentary appropriation rules and constitutional provisions governing public debt management. The outcome of the case could set a precedent for how public debt is audited and enforced in Kenya.
