How EACC almost lost Sh700 million in office block deal

Ethics and Anticorruption Commission Chief Executive Officer Halakhe Waqo

A multi-billion-shilling tender for acquisition of a joint office block for two State agencies was cancelled after it emerged that they were going to pay Sh700 million above the market value, Weekend Business can reveal.

The Ethics and Anti-Corruption Commission (EACC) was about to seal the deal for their new Sh2.6 billion Upperhill joint home with the Office of the Director of Public Prosecution (ODPP) when the Public Procurement Regulatory Authority (PPRA) stopped them in their tracks.

Before the transaction was stopped, ODPP Head Keriako Tobiko had written to his EACC counterpart Halakhe Waqo complaining of his office’s exclusion from the price negotiation for the new office block. CitiScape Valuers & Estate Agents Ltd had offered to sell to EACC/ODPP the “Flamingo Towers” adjacent to the British High Commission at a cost of Sh2.9 billion. Despite the venture being a joint one between ODPP and EACC, the latter exclusively negotiated and agreed on Sh2.6 billion.

“As you are well aware, the building is being acquired for the offices of both EACC and ODPP and it is for this reason that the ODPP is represented in the Joint Acquisition Committee. I was therefore surprised to learn that EACC proceeded to evaluate the tender and to negotiate and agree on the purchase price without involving the ODPP,” Tobiko said in a letter dated December 20, 2016.

Tobiko also sought clarity on whether the contract that was about to be signed was to be between EACC and CitiScape alone or whether it would also incorporate his office. He insisted on his office being “meaningfully” involved in the process of acquiring a building it was going to co-own.

When he met with Waqo on February 20, 2017 to iron out the matter, a fresh issue of the valuation of the property emerged. The agreed cost of Sh2.6 billion was Sh200 million higher than the Sh2.4 billion affixed on the property by the Government valuer.

A small joint team was formed to research on the potential pitfalls of falling out of scope with the Government valuer, sought advice of PPRA, reviewed the process and returned a negative verdict on the tender.

“The letter by the PPRA raised a number of issues especially in regard to the negotiated price which was exclusive of VAT. It noted that if VAT was to be applied the price would translate to Sh3.1 billion closer to the valuation of the property owner,” the team’s report said while recommending termination of the tender.

The authority asked the two institutions to place a higher premium on the Government valuation price and advised them to seek further guidance from the ministry of lands and physical planning considering the expertise required.

In considering the PPRA’s concerns, the committee also noted that suspects have been charged in court in the past for procuring above Government valuation. They also figured out the procurement method they were using -- request for proposal -- could have landed them in more trouble.

“Noting the issues raised by the PPRA, the valuation of the Government valuer, and the procurement method used, the team is of the considered view that the commission considers terminating the tender and starting the process afresh,” the committee advised EACC/ODPP heads on March 7, 2017.

The team comprised Dorcas Oduor and Kennedy Kimuyu from ODPP and David Too, Pius Maithya and Robert Kanyi from the EACC. The EACC had been handling the procurement on behalf of the two institutions.

Yesterday, DPP Keriako Tobiko expressed shock at sentiments attributed to the EACC CEO Halaqhe Waqo that the joint venture to acquire the building had been abandoned since it had proved difficult to find space to accommodate the two institutions.

Other reports attributed to National Assembly’s Justice and Legal Affairs committee chairman Samuel Chepkonga said EACC should cut off ODPP from the venture. “I am shocked if indeed those are the CEO’s words because nobody has informed us that the joint venture is over. And this coming when we have worked together in this process, including in the termination of the tender,” Tobiko said.

He also expressed fears over “possible” attempt to drive a wedge between the two institutions. The ODPP is located at NSSF Building, Block A while EACC operates from the leased Integrity Centre building across the road.