Over 500 parcels of land belonging to Kenya Railways Corporation have been illegally acquired by individuals and other entities, the Auditor General has disclosed in a damning report detailing extensive land grabbing and asset mismanagement.

Auditor General Nancy Gathungu revealed that a total of 529 parcels, spread across Mombasa, Limuru, Nakuru, and Kisumu, have either been grabbed or irregularly allocated without the corporation's consent.

She raised concerns that while efforts have been made to recover the land, most parcels remain unreclaimed.

The report for the financial year ending June 2024 paints a grim picture of Kenya Railways’ failure to protect and manage its assets, highlighting that the corporation has not conducted valuation for much of its land and lacks a proper asset register.

The register provided for audit lacked crucial information, including serial numbers, land reference numbers, location details, and ownership status.

Gathungu noted that asset descriptions; such as whether the land is freehold or leasehold—and certificate numbers were also missing, making it difficult to verify ownership or track the corporation’s property.

She pointed out that many assets had not been tagged, in breach of Section 4.11.2 of the Operations and Maintenance Policy on Asset and Liability Management in the Public Sector, which requires the accounting officer to implement a proper identification system guided by the National Treasury.

The report further questioned the credibility of the Ksh17.95 billion land balance reflected in the corporation’s financial statement under the Sh521.6 billion worth of property, plant, and equipment.

“In the circumstances, the accuracy and fair value of the land balance of Sh17,951,351,801 could not be confirmed,” the report reads.

Additionally, the report noted that Kenya Railways has failed to pay Sh8.3 billion in compensation to individuals whose land was compulsorily acquired, with no explanation from the management on why the amount remains unsettled.

In Mombasa, the report says land adjacent to the railway station, measuring between 0.75 to one acre, was irregularly allocated to private individuals, who have since developed the properties.

“Although management indicated that the leases were procedural, board approvals authorising the leases were not provided for audit,” it adds.

The corporation has since sought the help of the Ethics and Anti-Corruption Commission, but the process to repossess the land had not been completed by the end of June 2024.

In Limuru, parcels of land within and around the railway station were allocated to third parties without Kenya Railways’ consent by either the Commissioner of Lands or now-defunct local authorities.

These include nine industrial plots measuring about three acres and another plot at Kikuyu Railway Station measuring approximately two acres. Despite efforts by management to engage relevant government agencies, the land has not been reclaimed.

The situation in Nakuru is no different. Land measuring seven acres in Ziwani, belonging to the corporation, has been encroached on and is now being used as a bus park by the County Government of Nakuru.

The report reveals that the land was allocated to private individuals on a 25-year lease and Ksh37.4 million paid as premium, generating annual rent of Sh13.3 million.

However, “management has not explained the steps being taken to revert the land to the tenants,” and the corporation continues to miss out on annual rent income.

In Kisumu, residential units owned by the corporation have been taken over by organisations that have no lease agreements in place, resulting in a loss of Sh27.4 million annually in rent.