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MPs want EACC to investigate 11 state agencies

At least 11 state corporations could be the subject of anti-graft investigations over wide-ranging irregularities including flawed procurement and massive financial impropriety.

A new report by the National Assembly's Public Investments Committee has laid bare the plunder that could return to haunt previous and current bosses at the parastatals.

The report covers a four-year period from 2013 - when Jubilee rode to power - to 2018.

MPs have now called on the the Directorate of Criminal Investigations and the Ethics and Anti-Corruption Commission to swing into action and bring the culprits to book.

Adversely mentioned are parastatals with huge budgets.

These include the Kenya National Highways Authority, the Kenya Airports Authority, Kenya Pipeline Company, National Irrigation Board, Kenya Ports Authority, Communications Authority of Kenya and the Kenya Investment Authority.

Others are the Kenya Ferry Services, Kenya Plant Health Inspectorate Service, Kenya Maritime Authority and the National Social Security Fund.

The committee chaired by Mvita MP Abdulswamad Nassir says some state corporations undertook irregular procurement processes and blatantly violated the law.

These illegalities led to inflated costs of projects, bleeding the national coffers.

For instance, KeNHA initially awarded M/s Talewa Road Construction Ltd a tender for maintenance of Mombasa-Miritini road in the 2014-2015 financial year at a contract sum of Sh341.2 million.

However, the contract was terminated due to poor performance after having paid the contractor Sh144.1 million.

KeNHA then went ahead, repackaged and awarded M/s SS Mehta the contract through direct procurement at a sum of Sh292.7 million.

The move brought the total contract expenditure to Sh436.8 million, an increase of over Sh95.6 million or approximately 28 per cent from the original contract sum.

“This was in breach of law and resulted in wasteful expenditure,” the PIC concludes in the report.

According to the committee, the DCI and EACC should investigate KeNHA's 'casual' manner in which its management was executing contracts.

For instance, the committee observed that the management had a tendency of even not circulating the agenda in time to tender committee members.

This, according to the MPs, denied members an opportunity to diligently scrutinise documents before making decisions with far-reaching ramifications to the Exchequer.

“The then tender committee of the KeNHA should be reprimanded for overseeing a policy that violated the procurement law,” the committee said.

In one instance during the construction of Thua bridge at a cost of Sh424 million, KeKHA was forced to pay the contractor M/S KIU construction a further Sh194.6 million as interest for delayed payments.

On the Timbora-Eldoret road rehabilitation, the committee noted that KeNHA varied the contract from an initial sum of Sh3.1 billion to Sh5.2 billion.

This means that the contract was varied by 68 per cent, being above the authorised limit of 25 per cent.

Kenya Airports Authority also terminated various contracts after significant amounts of the contract sum were paid, the report shows.

The committee wants former managing director Stephen Gichuki reprimanded for failing to repossess grabbed Wilson Airport land.

Gichuki is also in trouble for paying monies for works not done and for allegedly awarding contracts without the relevant approval process.

This was in respect of fencing projects at Embakasi estate and Ukunda airstrip, which were valued at Sh24.5 million and Sh24.8 million respectively.

He stands to be surcharged for Sh8.9 million being payments to the Ukunda contractor whose bid was terminated after land disputes delayed the project.

“It was misuse of public resources to pay the contractor Sh8.9 million for the work that was never undertaken at Ukunda airstrip,” the report reads.

MPs have also invited the DCI to probe circumstances under which the Kisumu and Manda airports title deeds were stolen only to be found days later.

PIC further wants investigations into works at the Tseikuru airstrip which has since stalled yet has received Sh227 million so far.

MPs want the EACC to go after officials who paid Sh23.6 million on non-existent temporary offices way back in 2016.

The DCI has been invited to probe the tender committee for the construction of offices above JKIA parking garage for irregular use of the project’s Sh7.3 million contingency fund.

At the Kenya Pipeline Company, PIC is raising concerns about the delayed EACC probe into the direct procurement of hydrant pit valves.

PIC also observed that the company – Aero and Dispenser Co Ltd - had supplied some products to KPC in 2003 and was associated with an employee of KPC.

“The EACC should prefer charges against those found culpable failure to which the EACC chairman and CEO will be held in contempt of Parliament.”

In December 2018, however, EACC arrested KPC top brass including former managing director Charles Tanui over the irregularities.

The suspects are in court.

MPs want former KPC managing director Joe Sang’ surcharged for losses in the procurement of a Sh50 million e-budgeting system which has never worked since 2015.

KPC paid Sh30 million in advance for the system which PIC says left the company exposed to loss for there was no security.

Sang' is already battling a Sh1.8 billion Kisumu oil jetty contract scandal in court.

The committee wants EACC to probe the circumstances under which the Communication Authority of Kenya paid a contractor a total of Sh51 million as interest accrued for delayed payment of Sh1.2 million.

The tender for supply and installation of demountable office partitions was valued at Sh7.8 million but after the payment of the last installment, the contractor demanded interest for delays.

The matter was sorted out by an arbitrator who awarded the company, M/s Swarn Singh (Kenya) Limited, Sh51 million.

MPs also want Kericho deputy governor Susan Kikwai investigated and subsequently prosecuted over procurement irregularities at Kenya Investment Authority.

Kikwai, then CEO, is accused of failing to properly manage a contract awarded to a consultancy firm to develop an investment policy.

The authority reportedly lost Sh10.3 million - excluding undetermined legal fees to its lawyers - money it says it has attempted to recover from Kikwai in vain.

“The contract for the services did not have a witness and was only signed by the CEO, indicating a possible conspiracy to defraud the public,” PIC report reads.

At the Kenya Maritime Authority, the MPs want the EACC to probe high travel expense which increased from Sh34.4 million to Sh66.1 million during the period.

The committee raised suspicions on why the duty travel allowances increased yet there were no travel documents submitted for audit verification by the management.

At the NSSF, the panel wants the DIC to investigate the purchase of faulty SAP accounting and pension administration software.

“This casts doubt on the competency of the fund’s IT department in coming up with the required specifications. As a result, the fund is losing money for no services rendered,” the committee says.

The accounting software cost taxpayers Sh237.8 million while the social security pension administration system was bought at Sh397.8 million.

At the Kenya Ports Authority, the panel wants the DCI to probe the circumstances under which the board invested Sh2.9 billion in Chase Bank before it collapsed.

The management told the committee that since SBM took over Chase Bank, a total of Sh1.1 billion had been recovered and moved to KPA's accounts at Citibank.

By the time Chase Bank collapsed, the investment had earned an interest of Sh74.8 million meaning that KPA had lost Sh757 million in venture.

The committee wants the DCI and the EACC to investigate the circumstances under which then KPA management and board continued investing in Chase Bank.

The committee has asked the EACC to probe what it terms as a flawed technical evaluation process for bidders at the Kenya Ferry Services.

For instance, its contract for provision of security and crowd control to a local security firm at a cost of Sh59.1 million was not professionally evaluated.

According to the committee, the management of KFS does not carry out actual vetting of bidders but instead only requests for documents on personnel without verifying their authenticity.

The Kenya Wildlife Service, which has 222 pieces of land spread across the country, had title documents for only 45 parcels of land, the report says.

This article was published in The Star.


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