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How KPA loses billions to cartels

BUSINESS
By | Jul 16th 2009 | 3 min read
By | July 16th 2009
BUSINESS

By Standard Team

Kenya Ports Authority is losing billions of shillings every year through malpractices and outright corruption in procurement, The Standard can reveal today.

A damning report prepared by a committee of inquiry set up by the authority to look into the administration of its tendering systems gave a harsh verdict, saying the department is mired in corruption perpetrated by a powerful cartel.

And The Standard has established that some of the firms that the report fingered as winning numerous tenders are associated with powerful politicians, including a Cabinet minister.

KPA recently sent a senior procurement and supplies manager on compulsory leave but the Transport Ministry headquarters immediately overturned the directive.

Sources said the decision by Transport Minister Chirau Mwakwere went against the wishes of the KPA management.

The report points out that one firm was recently awarded a tender to supply sandblast at Sh4 million while the market cost of the same was a mere Sh100, 000.

According to the report, dated June 3 and prepared by a committee headed by Mr Sylvester Ndongoli, KPA loses billions of shillings through overpricing of supplies.

Complaint lodged

The committee was established after some firms lodged a complaint, saying KPA procurement had become the preserve for a few firms.

A source at the port, who did not want to be identified because the issue was sensitive, said a close relative of a minister owns one of the said companies, while others are owned by senior people close MPs and some senior KPA employees.

"This is a cartel that has links with even some people at the (Transport) ministry headquarters," said the source.

The report also says the staff at the procurement deparrment only invite selected firms to bid for the supply of goods and services.

The probe team found that procurement officers alter documents in total disregard of professional and moral ethics.

"Information contained in the quotation files show changes/deletion of firms invited to quote after the list is made," the report reads in part.

The report cites a case where 140 companies were pre-qualified yet the tenders were revolving around eight companies only.

The dossier also says some companies are issued Local Purchase Orders to supply goods and services even before contracts are drafted.

According to the report five companies were issued with PO No 4500049781, PO No 4500051421, PO 4500032546 and4500051622 and PO No 4500048084 before contracts were drafted.

Soliciting bids

The committee asked the management to consider reshuffling some staff in the department to save KPA from losing billions of shillings in a bad tendering system.

The committee also recommends that KPA should establish procedures to stop staff members from engaging in favouritism while soliciting bids from pre-qualified suppliers.

They also want the head of the procurement department to ensure the Public Procurement and Disposal laws are followed.

The investigations by the committee also reveal that KPA does not undertake market surveys to know the prices of goods, a requirement by the Public Procurement Act.

Tender suspended

"The procurement and supplies manager is supposed to maintain a data base of prices to act as a safeguard against overpricing. The department appears not to see the sense of it yet the authority continues to lose money through overpricing," the report says.

Two weeks ago, according to the report, a tendering process for a harbour crane that is expected to cost at least Sh300 million was suspended over issues of procurement modalities.

Some firms claimed the wording of the tender was meant to lock out competition and turn the process into a single sourcing affair.

KPA Public Relations Manager Bernard Osero said he could not comment on the report because he had not yet seen a copy.

"I cannot comment now but I know that whatever recommendation the committee had given is for the good of KPA," he said.

Other committee members who signed the report include Ms Georginah Ifire, Mr Geoffrey Kavate and Geofrey Ng’etich as the committee secretary.

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