EACC- Prosecute Kenya Pipeline employees for theft of public funds

EACC CEO Halakhe Waqo when he appeared before the National Assembly Energy Committee at Continental House, Nairobi on June 19, 2018. [Boniface Okendo/Standard]

Taxpayers lost Sh200 million in the fraudulent procurement of hydrant pit valves (HPVs) at the Kenya Pipeline Company (KPC).

An additional Sh400 million would also have been lost if payment had not been stopped by the Ethics and Anti-Corruption Commission (EACC).

These are among some of the startling findings in a report by EACC presented in Parliament yesterday.

Appearing before the National Assembly’s Energy committee, EACC officials led by Chief Executive Officer Halakhe Waqo revealed how KPC employees colluded with international business people to steal millions of shillings in taxpayers' money.

“On July 16, 2015, we received a report of irregular procurement of HPV complete with isolation valves and two years’ operating spares by KPC at a contract of Sh660 million,” Mr Waqo told the committee.

Defective HPVs

The equipment, which was meant to replace non-compliant and defective HPVs at Jomo Kenyatta International Airport (JKIA), was to be obtained from M/S Cla-Val Company Ltd, the original manufacturer, based in the US.

“However, evidence gathered indicated a conspiracy by officials at KPC to fraudulently acquire public funds through gross exaggeration of value of the equipment,” Waqo said.

The investigation revealed that KPC’s tender committee met on December 9, 2014 and approved direct procurement of the equipment.

But the next day, a staffer from the procurement department purported to forward the tender documents via email, seeking quotations from M/S Cla-Val.

“Curiously, the email was also copied to M/S Allied Inspection and Testing Inc of Canada. The email to Cla-Val was never received in the US as it was addressed to [email protected] and [email protected], both addresses for Canada,” Waqo said.

He revealed that evidence showed that KCP officials were in communication with M/S Allied Inspection and Testing Inc to supply the equipment.

“M/S Allied Inspection and Testing Inc had in turn initiated communication with M/S Cla-Val Ltd to be appointed as an agent of Cla-Val without disclosing that there were bid documents prepared in favour of Cla-Val,” Waqo said.

He told the committee that once appointed by the US firm, M/S Allied Inspection and Testing Inc wrote a letter purporting that Cla-Val had appointed yet another company - M/S Aero Dispenser Valves Ltd, a Nairobi-based firm, as its agent.

Forged letter

“Available evidence indicates that the said letter is a forgery and Cla-Val is not aware of it. But on December 7, 2015, M/S Aero Dispenser Valves Ltd submitted its quotation for the equipment for Sh663 million. The sum was later negotiated to Sh660 million,” Waqo said.

Consequently, a contract for the supply of the equipment was signed between KPC and M/S Aero Dispenser Valves Ltd.

“The equipment was supplied by M/S Aero Dispenser Valves Ltd, a briefcase company based at Utalii House, Nairobi. On March 31, 2015, KPC paid Sh262 million to M/S Aero Dispenser Valves Ltd."

The CEO also noted that investigations had revealed that between March 2014 and July 2015, M/S Allied Inspection and Testing Inc purchased goods from Cla-Val worth Sh72 million.

He told the committee that had KPC bought the equipment from Cla-Val, it could have cost Sh Sh59.7 million and not Sh660 million.

“We have recommended criminal charges against the suspects and EACC will institute a suit for recovery of Sh200 million that was overpaid by KPC to M/S Aero Dispenser Valves. No further payment of the balance of the contract price of Sh400 million will be paid,” Waqo said.