EACC extends freeze on NYS fraud accounts and enjoins ex-PS in case

Principal Secretary in the Ministry of Devolution and Planning,Peter Mangiti (Left) during a press briefing on the Sh791 million scandal at National youth services (NYS) on 09/11/2015 in Nairobi. Photo WILLIS AWANDU

Investigations into one of the controversial National Youth Service (NYS) tenders have taken a new twist after the investigating agency belatedly applied to extend a freeze of beneficiary accounts.

The Ethics and Anti-Corruption Commission (EACC) has obtained a conservatory order extending the freeze on Blue Star accounts at Paramount Bank, pending hearing and final determination of the application.

In the application described as defective by respondents, the EACC waited until two days into the lapse of six months freeze on accounts of Blue Star Enterprises to apply for an extension.

And even then, EACC did not enjoin Paramount Bank, where the Sh45 million paid to the company owned by Betty Njoki Muriithi and Jennifer Muthoni Kinoti was kept, in the suit.

Instead, it roped in former Devolution PS Peter Mangiti as first defendant and former NYS Director General Nelson Githinji, his Deputy Director Adan Harakhe and the entire ministerial tender committee as co-defendants in the application.

The account has been subject of a ping pong of sorts involving the EACC, the courts and CID’s Banking Fraud Investigations Unit (BFIU).

On October 29 last year, a Kiambu Magistrate Court issued a court order to freeze the account on the basis of BFIU investigations. Barely 14 days later on November 12, the High Court sitting in Nairobi issued another court order to unfreeze the account after BFIU cleared the tender of any wrong-doing.

Six days later on November 18, EACC froze the accounts through the same courts after being alerted of the unfreezing order by Mangiti. The six month freeze ended last month on May 18, but EACC moved to court two days earlier (May 16) to extent the freeze.

For the first time since he was charged in court over other matters related to the NYS monies, Mangiti has come out guns blazing, citing bad faith on the part of EACC, non-disclosure of material facts and the turn-around of the agency in targeting him.

“I support the preservation of the account in question, purely subject to the conclusion of a thorough and above board professional investigations. I am similarly surprised that the plaintiff would seek preservation of an account without joining the bank in these proceedings,” Mangiti’s replying affidavit seen by The Standard on Saturday, reads.

In its application, EACC said it reasonably suspected that the defendants in collusion with private persons conspired to pay out funds allocated to the NYS purporting to be payment for goods and services.

The tender in question involved supply and delivery of training materials in automotive engineering. EACC says the contract was undated, illegally awarded and unreasonably inflated.

“The applicant has a prima facie case against the respondents with a probability of success. Unless the orders sought are granted, the general public shall suffer irreparable injury that cannot be compensated by an award of damages,” the application by lawyer David Ruto for EACC reads.

In his affidavit, however, Mangiti argues that he does not deserve to be listed as a respondent since he is the one who initiated the process of preserving the monies in the first place. Besides, he says, he did nothing wrong by signing the contract to Blue Star.

Mangiti says the function of awarding the tender fell on the ministerial tender committee and his signing the contract was merely a functional fulfillment of responsibility.

“The claim of my alleged involvement in any irregularity in this contract is diversionary, malicious and is intended to obfuscate the real issues in controversy herein,” he claims in the affidavit filed this week.

Mangiti even attached a letter he wrote to EACC on November 16, 2015 and which triggered the commission to move to court and obtain the six month freeze against CID wishes. In the letter, Mangiti asked for EACC’s guidance in view of an earlier High Court order unfreezing the account.

“Given that the ministry is aware of the fact the EACC is also investigating certain aspects of this matter, we wish to inform you of this development for your further necessary guidance,” Mangiti’s letter copied to Chief of Staff and Head of Public Service Joseph Kinyua and head of BFIU Joseph Mugwanja said.

In his defense to the latest application, Mangiti also says that contrary to EACC claims, the contract was duly signed and dated, and was captured in the NYS procurement plan.

The Blue Star matter is just one of many such cases involved in the scandal collectively known as NYS scam and through which shady companies got multi-million shilling tenders.