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Sunday, May 2, 2010

Stealing elections just to end up bankrupt: the financiual agony of losing a parliamentary seat

It is no secret that Lawmakers who suddenly lose their seats in election petitions face a rough financial ride into ordinary citizenship. Dick Wathika is just about to discover this, as he joins Chirau Ali Mwakwere (Matuga), Omingo Magara (South Mugirango), George Thuo (Juja) and Joel Onyancha (Bomachoge) on the list of petition casualties. Isaac Njuguna, the head of Investment at Zimele, a financial consulting firm, says, "Unless MPs consider their five-year term as temporary jobs then they’d be in for a rude shock."

With Parliament's recent disclosure that dozens of MPs take home less than Sh10,000 a month from a salary of more than Sh1 million, and that more than 80 take home less than Sh100,000, the financial blow for those kicked out can be telling. "Banks normally look at MPs’ payslips and indeed the payslips look very healthy," says Muriuki Karue, a former Ol Kalou MP, and the architect of the Constituency Development Fund. "So they are ready to dish out loans. Add that to the average of Sh200,000 in mortgage … it can be hectic if you just lose your seat."

The former MP says the take-home pay for an average member of Parliament is usually Sh150,000, despite the huge income. Parliament gives MPs a mortgage of up to Sh8 million each, payable in less than 50 months. "If you lose your seat midway with such a mortgage, Parliament will take the house. It’s just like a bank," says Karue. The monthly salary of an MP is Sh200,000, plus allowances running up to Sh800,000 a month – enough to build and equip two classrooms in a rural primary school.

These mouth-watering perks are in the form of car maintenance allowance (Sh75,000), entertainment (Sh60,000), house (Sh70,000), responsibility (Sh30,000) and constituency allowance (Sh50,000).  Add to these Sh366,000 transport allowance and the daily Sh10,000 for MPs who belong to committees, and the financial shock that awaits an ousted MP once outside the precincts of the august House is complete.

However, all of them get to keep the high-end fuel-guzzlers which they get for free through a Sh3.3 million grant as soon as they enter Parliament. These then act either as a memory aid of days gone by, or a constant reminder of the fall from grace, moreso in these days of ever-increasing fuel prices.

As a former assistant minister for Public Works, Dick Wathika not only loses Sh100,000 in ministerial allowance, but also gives up the government-fuelled car and security. The clout of controlling the Sh180 million disbursed to constituencies in the current budget also disappeared as the Makadara MP was shown the door. Zimele’s Njuguna contends that with such huge incomes, the MPs have to be "smart" not to end up begging in towns.

The financial consultant said MPs who lost their seats would have to adapt to a lower lifestyle. "The initial impact should force such a person to adjust their budgets downwards, to the bare minimum, says Mr Njuguna, adding that, as any other person who suddenly lands big money, the MPs must have taken on board extra commitment, such that when the money taps are turned off, they are left holding the baby.

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