Panic as EACC arrests former magistrate, top port managers for Sh700 million fraud

Some of the 40ft TEUs containers for export on board the MV Ever Diamond Ship which docked at the port of Mombasa with a new record performance, November 13, 2018. [PHOTO: GIDEON MAUNDU/STANDARD].

Panic has gripped the Mombasa port as anti-graft agency moves in to arrest past and present managers of Kenya Ports Authority Retirement Benefit Scheme (KPARBS) over loss of Sh700 million.  

The arrests are a culmination of years of legal combat between the Kenya Ports Authority (KPA) and KPARBS for control of the multi-billion pension fund created in 2012 to cater for port workers under 45 years.

A brief letter by the Ethics and Anti-Corruption Commission (EACC) announced on Tuesday that it had “been investigating allegations of fraudulent acquisition of public funds at the Kenya Ports Authority Retirement Benefit Scheme by way of purchase of land in Kikambala near Vipingo, Kilifi, measuring 100 acres at Sh700 million.”

Employees over 45 years belong to a separate retirement benefits scheme.

But also targeted for arrest is a past trustee of the scheme who is now an MCA, and a former magistrate in Mombasa. One of the suspects has, reportedly, gone into hiding amid reports that some of those who reported for interrogation by detectives were locked up at the Port Police Station till this morning when they will appear in court.

The letter claimed the cost of purchase was inflated. It indicated that at the conclusion of investigations, detectives had established that the suspects conspired to commit an economic crime.

It also laid out other crimes as abuse of office, fraudulent acquisition of public property, breach of trust and dealing with suspect property.

Since July 21, 2015, EACC has been investigating the fund’s board of trustees after it entered into an agreement to buy assets worth Sh700 million at Vipingo, Kilifi, from Kikambala Development Company Ltd.

KPA opposed the agreement and challenged it in the High Court, claiming it was illegal.

It argued that because their employees were members of the fund, it ought to have been consulted before its signing.

The ports authority further claimed that as the main contributor to the Fund, it was also a trustee and any agreement regarding disposal and acquisition of assets could not proceed without its involvement.