Busia Senator Okiya Omtatah has accused the National Treasury of engaging in a deliberate and fraudulent misappropriation of Ksh 19.7 billion from the Consolidated Fund in January 2025, alleging a massive cover-up tied to a controversial loan guarantee extended to Kenya Airways.
In a strongly worded letter addressed to the Clerk of the Senate, Senator Omtatah described the official response provided by Treasury Cabinet Secretary John Mbadi as “a desperate but futile attempt to conceal the diversion” of the funds.
The letter, dated 6th August 2025, was written in response to Treasury’s explanation (Ref: DMD 4/113 ‘C’ (101)) issued on June 10, 2025, following a formal request for clarification from the Senate.
Omtatah, a vocal advocate for transparency and fiscal accountability, insists that the Treasury’s response failed to address the core concerns raised on the Senate floor.
He accused the Cabinet Secretary of deliberately presenting misleading information to both Parliament and the public, asserting that the disbursement was not only unlawful but also designed to facilitate theft.
The senator argues that contrary to the explanation offered by the Treasury, the Ksh 19.7 billion was paid out under an incorrect budget line: Head 521, Item 2110000, designated for salaries and allowances, instead of the lawful channel, Head 522, Item 5210600, which covers guaranteed debt.
This discrepancy, Omtatah says, is clearly documented in the Statement of Actual Revenues and Net Exchequer Issues as of 31st January 2025, published in Gazette Notice No. 1864 dated 14th February 2025.
Further deepening the controversy, Senator Omtatah contends that the loan guaranteed by the government was unlawful from the outset.
Citing Section 58(2)(a) of the Public Finance Management Act (PFMA), he notes that the Cabinet Secretary is legally barred from guaranteeing any loan unless it is for a capital project.
The loan in question, however, was extended as working capital,a purpose explicitly disqualified by the law.
In his letter, Omtatah also questions Kenya Airways’ eligibility for the government guarantee. Under Section 58(2)(b) of the PFMA, the borrower must demonstrate the capacity to repay the loan.
At the time the guarantee was issued, Kenya Airways was still operating at a loss and could not meet the repayment criteria.
“Kenya Airways did not meet the criteria for being guaranteed by the National Government because it was in the red and had not returned to profitability,” the senator stated.
One of the most troubling aspects, according to Omtatah, is the channel through which the money was paid.
Instead of disbursing funds directly to the creditor banks, including Equity Bank, KCB, NCBA, DTB, and I&M, the Treasury reportedly routed the payment through MTC & Corporate Services Ltd., a private broker.
This, he says, violates Regulation 201 of the Public Finance Management (National Government) Regulations, which requires guaranteed debt repayments to be made directly to creditors.
The involvement of the broker, Omtatah argues, raises serious red flags and suggests a coordinated scheme to siphon funds.
Omtatah bolstered his claims by referencing Kenya Airways’ own 2024 audited financial statements. The report showed a total comprehensive profit of Ksh 19.8 billion for the year ending 31 December 2024.
According to him, this proves the airline had the financial ability to repay the loan and should not have triggered the redemption of the government guarantee. “Technically, by declaring a Ksh 19.8 billion profit, Kenya Airways did not have any debt that required to be cleared by the guarantor, the National Government,” he wrote.
In conclusion, the senator minced no words: “I am convinced that the Cabinet Secretary deliberately and fraudulently compiled misleading documents complete with a narrative intended to deceive the Senate and the public and conceal the theft of the Kshs 19,707,023,574.”
He added that the disbursement through a broker, rather than directly to creditor banks—only reinforces the conclusion that the withdrawal was fraudulent from the beginning.
The matter is now expected to escalate, with mounting pressure on the Senate Finance Committee and the Auditor-General to open a full investigation.
