(4) A public officer shall not borrow money, issue a guarantee, indemnity or security or enter into any other transaction that binds or may bind the national government entity or a county government entity to any future financial obligation, unless the borrowing, guarantee, indemnity, security or other transaction is authorised by this Act or by any other written law and, in the case of loans or guarantees, is within the limits provided under this Act. (5) A public officer shall not direct another public officer to do an act that constitutes a contravention of, or a failure to comply with, this Act, the Constitution or any other written law.

(6) A public officer who contravenes this section commits an offence and on conviction is liable to a term of imprisonment not exceeding two years or to a fine not exceeding one million shillings, or to both. (7) Where a national government entity or a county government entity— (a) engages in an action that it is prohibited from doing by this Act; or (b) fails to comply with an obligation imposed on it by this Act, a public officer who assisted or facilitated the act, or who was a party to, or contributed to, the failure, commits an offence and on conviction is liable to a term of The Public Finance Management Act, 2012 176 imprisonment not exceeding two years or to a fine not exceeding one million shillings, or to both in addition to provisions under Article 226(5) of the Constitution. Offences of financial misconduct. 197. (1) A public officer employed by the national government or a national government entity commits an offence of financial misconduct if, without lawful authority, the officer— (a) issues public government securities, or varies their terms and conditions; (b) opens a bank account in the name of the government; (c) lends money on behalf of the Government; (d) issues guarantees or indemnities on behalf of the Government; (e) issues securities for loans made to the government; (f) disposes of property belonging to, or under the control of, that government or entity; (g) fails to pay into a government bank account any public money entrusted to the officer or received by the officer for or on behalf of that government or that entity; (h) incurs expenditure or makes a commitment on behalf of that government or entity; (i) incurs wasteful expenditure on behalf of that government or entity; (j) fails to deliver to that government or entity a gift or donation made on a public or official occasion in accordance with the Public Officers Ethics Act; (k) fails to provide any information in the officer’s possession, or under the officer’s control, in relation to the financial management, financial performance, or banking activities of that government or entity or in relation to the management or control of an asset or liability of that government or entity when required to do so, except where such refusal or failure is required or authorised by this Act or any other written law; (l) fails to keep proper records or conceals, or The Public Finance Management Act, 2012 177 wrongfully destroys, information that is required to be recorded; (m) intentionally or recklessly obstructs or hinders a person while that person is acting in the performance or exercise of the person’s functions or powers under this Act; (n) makes any statement or declaration, or gives any information or certificate, lawfully required by or

under this Act knowing it to be false or misleading in a material respect; (o) for the purpose of procuring for the public officer or any other person or organisation— (i) makes improper payment of public money belonging to or entrusted to that government or entity; or (ii) makes improper use of any public property of that government or entity; or (p) fails to remit revenue received contrary to the provisions of sections 76(2) and 158(2) of this Act. Other offences by public officers. 198. (1) A public officer commits an offence if that officer— (a) takes possession of public funds or assets without lawful authority; (b) misappropriates public funds or assets; (c) conceals information on public finances to obtain a financial benefit either for the officer or another person; or (d) engages in a corrupt act.

(2) In this section, “corrupt act” includes soliciting or receiving an inducement. Penalties for offences. 199. Except as otherwise provided by this Act, a person who is found guilty of committing an offence under this Act for which no other punishment is given , that person is liable on conviction to a term of imprisonment not exceeding five years or to a fine not exceeding ten million The Public Finance Management Act, 2012 178 shillings, or to both. Duty of Principal Secretary to report suspected offences to relevant law enforcement authority for investigation.

200. (1) If the Principal Secretary suspects that an offence may have been committed under this Act, that Secretary shall take all practicable steps to report the matter to the relevant law enforcement authority to enable that authority to investigate the suspected offence and, if evidence of the offence is discovered, institute proceedings to prosecute any person who is alleged to have committed it. (2) If the Principal Secretary fails to report a suspected offence as required by subsection (1), that Principal Secretary is liable to disciplinary action in accordance with— (a) the terms and conditions of that Principal Secretary’s appointment or employment; and (b) any provisions prescribed by regulations for the purposes of this section. Duty of County Chief Officer to report suspected offences.

201. (1) If the County Chief Officer suspects that an offence may have been committed under this Act, he or she shall notify the County Executive Committee member for finance and take all practicable steps to report the matter to the relevant law enforcement authority to enable that authority to investigate the suspected offence and, if evidence of the offence is discovered, to institute proceedings to prosecute any person who is alleged to have committed it. (2) If the County Chief Officer fails to report a suspected offence as required by subsection (1), that County Chief Officer is liable to disciplinary action in accordance with— (a) the terms and conditions of that Chief Officer’s appointment or employment; and (b) any provisions prescribed by regulations for the purposes of this section. Liability of public officer for certain losses sustained by national government.

202. (1) A public officer is personally liable for any loss sustained by the national government that is attributable to— (a) the fraudulent or corrupt conduct, or negligence, of the officer; or (b) the officer’s having done any act prohibited by section 196, 197 and 198. (2) The National Treasury may, by civil The Public Finance Management Act, 2012 179 proceedings brought in a court of competent jurisdiction, recover damages from a public officer for any loss for which the officer is liable under subsection (1). Liability of public officer for certain losses sustained by county government.

203. (1) A public officer is personally liable for any loss sustained by a county government that is attributable to— (a) the fraudulent or corrupt conduct, or negligence, of the officer; or (b) the officer’s having done any act prohibited by section 196, 197 and 198. (2) The County Treasury may, by civil proceedings brought in a court of competent jurisdiction, recover damages from a public officer for any loss for which the officer is liable under subsection (1). Cabinet Secretary may impose institutional sanctions on national government entities.

204. (1) The Cabinet Secretary may apply sanctions to a national government entity that— (a) approves the contracting of debt beyond any debt limits provided under this Act; (b) defaults on a loan; (c) provides inaccurate information to public officers regarding financial matters; (d) issues a guarantee without proper authorisation; (e) issues a guarantee for an amount in excess of any limits set under this Act; (f) creates liabilities in excess of its ability to finance those liabilities; (g) fails to address issues raised by the Auditor- General to the satisfaction of the Auditor-General; or (h) contravenes section 196.

(2) The Cabinet Secretary may apply any of the following sanctions to a national government entity that has done, or failed to do, anything referred to in subsection (1) — (a) impose on the entity reporting requirements additional to those required by this Act or any other written law; (b) suspend the ability of the entity to reallocate funds; The Public Finance Management Act, 2012 180 (c) withhold from the entity funds to which the entity would otherwise be entitled under the Constitution or this Act; (d) suspend the entity’s authority to borrow money; (e) treat any accumulated liabilities as a charge on the entity’s future revenues; (f) appoint one or more administrators to administer the entity’s financial affairs for such period as may be specified in the appointment.