Safaricom in court over cancellation of IT contract

Safaricom says it agreed with Mobinets that the contract would be cancelled if issues of corruption were identified in the tender awarding process.

Nairobi,Kenya: Safaricom Kenya has defended itself against a multi-million shilling contract claim by a Lebanese company. The operator in response to a case filed by Mobinets SAL Limited through its lawyer John Ohaga, told High Court Judge Farah Amin that they notified the company of the termination of contract following corruption allegations.

Safaricom argued that it had agreed with the firm that the contract would be cancelled if issues of corruption were identified in the tender awarding process.

“Clause 3.2.1 of the agreement barred the plaintiff from making payments of money or anything of value to Safaricom employees or any other person including officials, representatives of any Government or public or international organisations or any other third party for the purpose of obtaining or retaining business with the company,’’ the court heard.

On the other hand, Mobinets SAL through its lawyer Kethi Kilonzo, claimed that it spent over Sh1 billion preparing to carry out the contract adding that the software systems management deal would all go to waste if Safaricom cancelled it.

“Mobinets has completed the functional specifications that Safaricom approved, purchased and shipped equipment worth $6.2 million (Sh558 million), and entered into contractual agreements with external hardware and software solution partners valued at $5 million (Sh450 million),” Mobinets said. According to Safaricom’s Head of Quality and Service Assurance James Githinji, the two firms had a deal that defined corruption as a breach of the contract and that the same would not be capable of attracting a remedy once it was breached.

corrupt practises

“The defendant (Safaricom) was under the obligation to terminate the agreement upon determination that the representatives of the plaintiff (Mobinets) engaged in corrupt practises during the procurement or the execution of the agreement,’’ he said in his sworn affidavit.

Justice Amin heard that the matter was not ripe to be heard by the court as the same had not gone through arbitration. Safaricom called off the deal through a letter dated September 1, in which it accused Mobinets of colluding with some of its staff to gain advantage over other parties during the tendering process.

The Lebanese firm says in its filed court papers that Safaricom pulled out of the deal before giving details about the allegations. It wants Safaricom stopped from re-awarding the contract until the dispute is resolved through arbitration.

The case will be heard on March 18, after the lawyers agreed to dispose of the matter by filing submissions.