Payroll heist: How ghost workers in state departments are minting billions

The teacher in rural Murang’a took home less than one-third of her salary last month. The nurse at a Level 4 hospital in Kisumu has not seen a meaningful pay increase in three years. The civil servant in Nairobi commutes two hours each way because she cannot afford rent closer to her office.

Across Kenya, millions of public sector workers are tightening their belts, squeezed by a cost-of-living crisis, stagnant wages, and relentless government appeals for fiscal discipline. But as ordinary Kenyans sacrifice, a parallel universe thrives — one where ghost workers feast on the public purse, where senior human resources officers manipulate payroll systems with impunity, and where cartels have, for decades, siphoned billions from the sweat of the hardworking majority.

On June 30, President William Ruto chaired a Cabinet meeting at State House, Nairobi, where the government approved sweeping reforms to dismantle what it described as “deeply entrenched and decades-long payroll fraud.” This followed a comprehensive government payroll audit that uncovered widespread weaknesses in payroll management.

A sample audit of 12 of the 53 State Departments revealed payroll irregularities amounting to Sh6.2 billion, exposing unauthorised alterations to payroll records, irregular payments, weak controls over statutory deductions, and fragmented payroll management with obvious oversight gaps.

The Cabinet directed the Directorate of Criminal Investigations (DCI) to investigate the fraud, verify personal numbers used in payroll processing, dismantle criminal networks manipulating government payroll systems, recover lost public funds, and ensure immediate arrest and prosecution of those found culpable. The investigation will target both serving and former public officers suspected of participating in or facilitating the fraudulent schemes.

But as the government orders an investigation into the payroll scandal, Union of Kenya Civil Servants (UKCS) has pointed an accusatory finger at the Public Service Commission (PSC), arguing that the cartels operate from within the commission itself.

“It remains the opinion of the union that any payroll fraud begins at the stage where the PSC approves fictitious employees,” UKCS Secretary-General Lawrence Nyaguti told The Standard. “Since PSC unconstitutionally took over the implementation of human resources management, accountability must shift to them — not to civil servants in the State Departments. The focus on State Departments is diversionary.”

Nyaguti cited the example of chiefs and assistant chiefs who have not been paid for two years. “They were legally employed, but PSC has refused to approve their posts. If there is to be any fraud in the payroll, it’s PSC that must be blamed.”

Public Service Cabinet Secretary Geoffrey Ruku assured his ministry is keen to restore integrity, accountability, and transparency in the public service, warning that any officers found culpable would face both disciplinary and criminal sanctions.

But a familiar question has begun to echo among analysts and civil servants: Will this time be different?

This is not the first nor the second time the government has discovered massive payroll fraud, the union says. Successive administrations have promised reform. PSC, Auditor-General, Ethics and Anti-Corruption Commission, DCI, and State House itself have all been seized of the matter. Each time, the cartels adapted. Each time, the ghost workers multiplied.

An Interim Payroll Audit Report, jointly prepared by the Auditor-General and the Public Service, revealed even more systemic rot.

The report found that 5,778 employees were recorded as posted before they were even hired, while three employees hired in 2023 were “born in 2046, 2048 and 2049”. The audit further uncovered 15,331 cases of irregular special salary payments totalling Sh4.336 billion, suggesting widespread manipulation of payroll systems to funnel money to unauthorised recipients.

Perhaps most damningly, 720 editors altered 4,732,082 payroll records and the changes could not be traced or verified — including 77 employees who edited their own payroll records, a breach that points to either gross negligence or deliberate complicity at the highest levels of the HR function.

The Human Resource Information System-Kenya, launched to replace the outdated Integrated Personnel and Payroll Database, was found to be inadequately integrated with key systems, with approximately over 300 State Corporations yet to onboard onto the system. Audit found the system lacking Multi-Factor Authentication, rate limiting, database logging, monitoring, and has not undergone penetration testing for more than a year.

Public Service PS Jane Imbunya says findings of the HRIS-K payroll audit “underscore systemic weaknesses in integration, governance, and controls that expose the government payroll to significant fiscal, operational and cybersecurity risks.”

This is not a system failure but a system designed for exploitation, say analysts, adding that it has defeated every agency tasked with stopping it.

Auditor-General Nancy Gathungu has been sounding the alarm for years. Her latest report for the financial year ending June 30, 2025, details widespread irregularities in county HR management systems.

In Samburu county, she found that 83 employees earned millions of shillings in salaries despite having no designated job titles or responsibilities. The audit revealed that during their recruitment, there were no advertisements, interviews, or shortlisting for the positions. Personal files containing employment records were missing.

In one discovery, auditors found that two employees shared the same national identity card number but different payroll numbers. “No explanation was provided to justify how one ID card could have multiple payroll entries,” the report states.

The audit revealed that Samburu paid Sh59.4 million in salaries outside the Integrated Payroll and Personnel Database system, contrary to National Treasury regulations. Additionally, 29 employees were hired under a “Governor’s Delivery Unit” without approval from the County Public Service Board, receiving approximately Sh60 million in salaries.

A special audit of 26 counties found that 596 of 2,354 sampled employees could not be verified, suggesting Sh978 million may have been paid to ghost staff.

State House has been aware of problem for decades. In 2023, the Head of Public Service ordered a comprehensive review of the payroll system. In 2022, the President ordered a crackdown. 

Similar reforms were announced in 2023, in 2022, and in successive administrations dating back to the early 2000s. Each time, the promises faded. Each time, the cartels adapted.

“This is a scandal that has defeated State House,” said a senior official at Public Service, who sought anonymity because he is not authorised to discuss the matter publicly. “The systems have been compromised for decades. It’s about lack of the will to prosecute, jail, or dismantle the networks that have captured the payroll.”

Teachers’ unions have been at the forefront of demanding accountability. Kenya National Union of Teachers (Knut) and the Kenya Union of Post-Primary Education Teachers (Kuppet) have consistently raised alarms over irregular salary deductions, unpaid union dues, and the government’s failure to implement Collective Bargaining Agreements.

KNUT Deputy Secretary-General Hesbon Otieno has demanded greater payroll transparency and immediate clarification after thousands of teachers discovered an unexplained Sh108 deduction on their June 2026 payslips. Union officials estimate that if the adjustment were applied across the more than 300,000 teachers under Teachers Service Commission, it translates to Sh32.4 million a month.

Strange deductions

Unions have questioned the basis under which the deductions are done. “The authority to deduct from teachers’ salaries rests solely with the TSC, acting within a clear legal and administrative framework, including approvals from Ministry of Education,” he said, adding that many teachers did not consent to deductions.

Civil servants face a barrage of mandatory deductions that “substantially reduce net earnings and weaken household financial stability”. More than 47,300 civil servants take home less than one-third of their basic salary. Yet billions are being stolen.

The Auditor-General’s findings underscore that money which should recruit nurses, teachers, and technicians is instead diverted to ghost workers. The hardworking majority pays the price — through higher taxes, through reduced services, through a government that demands sacrifice from the poor while protecting the corrupt.

International lenders are watching closely. Kenya has lacked IMF support since March 2025, when it terminated a standing arrangement, denying the country Sh110 billion. It recently shared a draft of its governance diagnostic assessment with Kenya, designed to flag governance weaknesses and corruption vulnerabilities.

World Bank has also stepped in, supporting Kenya’s push for stronger accountability and social protection.

But the government’s track record inspires little confidence. Whistleblowers who expose payroll fraud have faced demotion, transfer, threats, and in some documented cases, physical violence.

For now, ghost workers continue to draw salaries. The cartels continue to manipulate the system. And the hardworking majority continues to toil.