Fresh twist in rail saga as file suddenly goes missing

President Uhuru Kenyatta accompanied by First Lady Margaret unveils a plaque to mark the official launch of the Standard Gauge Railway project in Miritini, Mombasa on November 28 last year. PHOTO: MAARUFU MOHAMED/STANDARD]

By PAUL WAFULA

A file of the Chinese firm contracted to build the controversial Standard Gauge Railway project is missing from the registrar of companies, days after Parliament launched investigations to establish who the firm’s directors are.

The missing file adds a new dimension to the ongoing investigations given that officials of China Road and Bridge Corporation (CRBC), Kenya, have failed to honour two invitations by one of the parliamentary committees probing the railway saga.

The Standard on Sunday has learnt that Parliament’s Public Investment Committee (PIC), has been pursuing a theory that CRBC, Kenya may have one or more directors that are not Chinese in a bid to uncover the much-talked about brokers. MPs also want to know who the local shareholders are, if they exist.

“We are aware that the file is missing. But we have written to the Registrar of Companies to tell us who the directors of CRBC are. We are determined to see this file even if it means us walking to the registrar’s office and camping there until it is produced,” Eldas MP Adan Keynan said in an interview.

Mr Keynan, who is also the PIC chairman, declined to divulge what the committee had found so far but added that the committee will not allow itself to be intimidated.

This is after President Uhuru Kenyatta declared last week that the deal was above board, before two parliamentary committees finish their investigations.

“What we are saying is that we want to be allowed to investigate this matter as the law allows us. I can assure the public that our report will be as firm as the JM Kariuki murder report,” Mr Keynan said as he fought allegations that his committee was divided.

Insiders at the PIC told this paper that they were alarmed when they learnt that CRBC had been operating in Kenya since the 1980’s yet it was only incorporated in China in 2005.

“We have information that the local outfit of CRBC, Kenya may have one or more local shareholders and this may explain a lot of the puzzle surrounding this contract. A state corporation is not always owned fully by the government but we are also alive to the fact that this may also not be true and that is why we are investigating,” an MP who sits on the committee said.

In one of the sessions, Kiminini MP Chris Wamalwa argued that there was no way a government entity can be registered as a Kenyan company.

“This could be an avenue by a few individuals in the country who would want to use the loophole to fleece public funds without following the procurement rules. That could be the reason why there was no competitive bidding and the AG was not properly involved,” said Mr Wamalwa.

This newspaper visited the Registrar of Companies three times last week, to independently verify these allegations, and got the same answer from attendants.

Sh200 fee

Members of the public can access any file at the registrar of companies after paying Sh200 fee for perusal.

The attendants then fish for the files from the shelves and allow one to peruse them in a special room set aside for that purpose. But the three different attendants who looked for the file for this paper at separate times were equally puzzled that the file could not be traced.

We established that the file number for CRBC, as registered in Kenya is C166624, meaning that it exists.

In its website, CRBC’s describes itself as one of the four large state-owned companies in China which mainly focuses on the contracting of such projects as roads, bridges, ports, railways, airports, tunnels, water conservancy projects, municipal works and dredging works both at home and abroad.

The website adds that its business scope also covers investment, industrial development, trade, leasing as well as services adding that it has more than 50 branches and offices in over 50 countries and regions in Asia, Africa, Europe and America.

“Growing out of the Foreign Aid Office of the Ministry of Communications of China, CRBC has been undertaking overseas projects aided and financed by Chinese government since 1958. In 1979, CRBC was formally established and entered the international project contracting market. It became a wholly-owned subsidiary of China Communications Construction Company Limited (CCCC) after a major corporate restructuring in 2005,” the firm’s website says.

Most international companies who invest in Kenya end up ceding some small stake to local shareholding, some of whom like in the telecoms and mining sectors are compelled by law.

This practice is most common in the telecommunications and mining industry.

However, the faces of the local ownership of some of the successful companies has often been shrouded in mystery, at times hidden under layers of shell companies. For instance investigations on who are behind Mobitelea Ventures Ltd, a shell company registered in Guernsey, have never been made public.

In 2003, Mobitelea was allowed by United Kingdom’s Vodafone to acquire a 5 per cent stake in Safaricom in return for advisory services in East African telecoms.

After learning this, MPs launched an unsuccessful investigation to establish whether its owners included politicians who may have used their influence to facilitate Vodafone’s original $20m investment in Safaricom in 2000.

Centre of controversy

CRBC has been at the centre of the railway controversy, after it was handed the contract despite being the same company that conducted the feasibility study, exposing it to conflict of interest. But the company is yet to come out publicly to defend itself. PIC expects CRBC, which was blacklisted by the World Bank after corruption investigations, to appear before it next week.

According to section 87 of the Public Procurement and Disposal Act (PPDA), “A person who enters into a contract resulting from a procurement by request for proposals shall not enter into any other contract for procurement of goods or works that follows from or is related to that original contract.”

But the government has defended itself that the procurement for the SGR was done under a Government-to-Government contract, in a deal that shields it against following Kenya’s procurement law.

Though Attorney General Prof Githu Muigai has maintained that he has never given a legal opinion specific to the SGR railway, his letter to the Public Procurement Oversight Authority (PPOA) dated April 30, 2013, opined that “a so-called government-to-government agreement is not a method for selecting suppliers so as to support the award of contract absent an actual process of selecting project developers or component suppliers”.

Prof Muigai added that in cases where the government contributes from her own resources, and in any form, to any procurement process under such agreement or treaty, the (PPOA) Act applies.

The AG has come out strongly in recent days to explain that this opinion was offered in a wider context to help the PPOA interpret the law and that it had been taken out of context when suggested that it was in reference to the railway project.

Parliament also wants to establish whether CRBC has ever constructed a railway line elsewhere in the world. “There is a difference between civil works and laying a railway line. What government has demonstrated so far is that this company has done quite a lot in civil works, which is more like excavation, building roads and bridges, for someone else to do the actual railway.

But we have no evidence that it has built a kilometre of a railway line anywhere in the world,” a source familiar with the project said.