NAIROBI, KENYA: The Director of Public Prosecution Noordin Haji has ordered the arrest of senior government officials over fraud linked to two multi-purpose dams in Kerio Valley
Key among those to be arrested include Cabinet Secretary Henry Rotich (National Treasury), PS National Treasury Kamau Thuge, Dr Susan Koech PS East Africa Community, MD Kerio Valley Development Authority David Kipchumba Kimosop , Kennedy Nyakundi (National Treasury), Titus Mureithi and Jackson Njau Kinyanjui.
Others include Nyakundi Nyachiro (Chief Economist National Treasury), Jackson Njau Kinyanjui (Director resource mobilization National Treasury), Titus Mureithi, William Kipkemboi Maina, David Walunya Ongare (NEMA), and Boniface Mamboleo(NEMA).
The arrests follow a series of investigations by Director of Criminal Investigation and the DPP’s office after a public outcry over the two dams overseen by the Italian construction company CMC Di Ravenna.
Haji noted that the Kerio Valley Development Authority (KVDA) failed to comply with the principal of fairness and value for money in awarding the contract to CMC Di Ravenna. “They awarded the contract while aware that CMC Di Ravenna was straining financially back in Italy,” he noted.
Haji said the officials broke the law on public finance management and flouted procurement rules thereby committing illegalities in the Arror and Kimwarer dams project.
He said he has gathered sufficient evidence to prosecute the officers. “The persons we are prosecuting today were mandated to safeguard public interest but failed,” he said.
According to DPP, the Kerio Valley Development Authority (KVDA) flouted the procurement rules in handing the Arror and Kimwarer dams contract to CMC di Ravenna in which the contract was inflated by Sh17 billion.
He says the contractor (CMC di Ravenna) also submitted a design of the dams four years after the required time. Haji also ordered the arrest of CMC di Ravenna top directors
“We borrowed, the loan had an interest, borrowed more money to pay for the interest, this is massive loss of public finance.”
On July 10, 2019, a team of top Kenyan security officials flew to Italy to recover money paid by Treasury for stalled Sh65 billion Arror and Kimwarer dams in Elgeyo Marakwet County.
Sources told The Standard that Director of Public Prosecutions Noordin Haji, Director of Criminal Investigations George Kinoti and select State Law Office officers arrived in Italy with evidence of the said fraud to convince their Italian counterparts for action.
Part of the evidence was the Auditor General’s report that showed more than Sh4 billion was paid for the stalled work. The team had met Italian ambassador to Kenya Alberto Pieria and talked about fighting graft and related crimes.
“The discussions centred on possible collaboration between Italy, EACC, DCI and ODPP on capacity building, mutual legal assistance and investigation in combating corruption,” said Twalib Mbarak, the EACC CEO.
While in Italy, the team sought to meet an Italian Government-owned insurer, Service Assicurativi Del Comercio Estero (SACE), which was paid Sh11.1 billion as an insurance premium for a loan to build the two dams.
“We are paying interest on a loan that we don’t know about. In fact, we may default and that is why the team is in Italy to see how we can have the money back,” said an official who was aware of the issue.
Another official said: “The deal was government-to-government; however it has now turned commercial. We cannot secure a loan and also pay for the insurance of the same.”
He regretted that the loan had matured and that the government was required to start serving it without a project on-site.
National Treasury CS Henry Rotich paid Sh11.1 billion as the insurance premium for the Sh65 billion loan to build the two dams.
Experts say this suggests that Kenya paid 15 times over the fair rate to the Italian government-owned credit insurer for insuring the loans procured from a consortium of banks led by Intesa San Paolo.
This formed a subject of interest for investigators to determine why SACE charged 17.5 per cent of the loan amount as premium, against industry rates averaging 1.5 per cent.
Rotich said his ministry was not involved after project identification, prioritisation and procurement were completed by the line ministry and the implementing agency, Kerio Valley Development Authority.
Rotich also acknowledged that he released Sh7.8 billion to KVDA for onward transmission to CMC di Ravenna, as an advance payment to help kick start the project.
Advance payments of Sh4.3 billion were paid on December 22, 2017, for Arror (15 per cent of the Sh28.5 billion contract amount) and Sh3.5 billion on November 6, 2018, for Kimwarer, whose contract was worth Sh23.1 billion.
Additional reporting by Cyrus Ombati and Roselyn ObalaMore to follow
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