DCI steps in over Sh600m fraud claims in Thwake Dam project

An aerial view of construction works at Thwake Dam. [File, Standard]

The protracted legal battle between the Chinese contractor of the Sh82 billion Thwake Dam and a local subcontractor has taken a new twist.

This is after law enforcement agencies moved in to investigate an alleged scheme to defraud taxpayers of Sh600 million.

JTG Enterprises Ltd, a local construction company, has recorded a statement with the Directorate of Criminal Investigations (DCI), alleging that the China Gezhouba Group Company Ltd (CGGC) inflated the bills for excavation works on Kenya's biggest dam project.

Joseph Thuo, a director with JTG Enterprises, claims in the statement seen by The Standard Business that the Chinese contractor defrauded the Kenya government by allegedly changing the topography of the main spillway of the multipurpose dam in Makueni County.

The Chinese firm did not respond to our queries on the new claims, with a representative saying they had no comment.

"(We have) no comments regarding the DCI (case)," said a representative in response to our queries via phone.

CGGC Kenya Branch General Manager Tang Yazhou later appeared to dismiss the claims in a statement.

"Since the establishment of our Kenyan branch in 2010, CGGC has demonstrated its commitment to excellence by delivering projects of global significance. The Thwake Dam Project, one of the flagship projects of Kenya 2030 Vision, for which CGGC is the principal contractor, reflects our dedication to upholding the highest standards of collaboration and performance," said Mr Yazhou.

In the case before the DCI, JTG Enterprises' Mr Thuo alleges the contractor defrauded the Kenya government by “increasing the elevation upwards away from the original elevation and changed the volume of the excavation so that they can be paid more money than the actual works done”.

“We as the people of Kenya are losing taxpayers’ money from corruption and false invoicing from CGGC to the government of Kenya.”

JTG Enterprises, which was hired in 2019 to do excavation and support for the main spillway project for the mega dam, alleges that it worked based on initial measurement of the topography of the area.

“I reported this matter to DCI to be investigated,” writes Mr Thuo in his statement to DCI.

The new development, which could result in a criminal proceeding, is a twist to the ongoing legal battle in a civil case between JTG Enterprises and China Gezhouba Group Company over non-payment of debt owed to the Kenyan company.

The Kenyan firm sued the Chinese contractor in 2021 following a bitter dispute over payment, accusing it of breaching the supplementary agreements in the sub-contract for the excavation work of the main spillway of the dam which is nearing completion.

The supplementary agreements were to take care of unforeseen excavation works on the dam site. The Kenyan firm subsequently established the topography of the site had more rock material than had earlier anticipated.

This led to an additional payment claim based on higher excavation rates for the rock formation in the sub-contract, a payment which China Gezhouba Group refused to honour.

The protracted disputes have thrown into uncertainty the multi-billion-shilling dam in Eastern Kenya billed as critical for the country's food and energy security needs.

The financial headwinds that have rocked the Chinese firm are likely to throw the project in limbo at a time when the African Development Bank (AfDB), which has been financing it, is mulling bankrolling phase two of the dam to include irrigation and power generation systems.