Audit uncovers rot at cement firm

Business

By Jackson Okoth

The board of directors of East Africa Portland Cement (EAPCC), could be penalised for attempting to sell off Government stake in the firm without following procedure.

Directors of EAPCC are also on the spot for disregarding the Privatisation Commission and other relevant ministries while planning to execute this plan.

In a damning report on malpractices at the cement firm, dated February 2012, the Efficiency Monitoring Unit (EMU) at the Prime Minister’s office also recommends action against the EAPCC board for a Sh30 million loss the company incurred for irregular purchase of a clinker, in contravention of public procurement rules.

Further investigations

The EMU recommends that the tender and procurement oversight committees be disbanded and that a taskforce be appointed to further investigate what transpired in the plot to dilute Government shareholding in the firm.

In a letter dated December 27, last year, and written to Vincent Nyangiro, secretary Efficiency Monitoring Unit, Industrialisation PS Dr Karanja Kibicho requests for forensic investigation into alleged malpractices in the firm.

On the list of areas the PS was urging for investigation was an allegation that there was a clinker price variation against tender committee’s advice irregularities in procurement, outsourcing and a botched contract for coal handling. The PS also accused EAPCC of using alternative procurement methods between August 15, and November 30, last year, where it acquired goods worth Sh1.1 billion without authority from the Public Procurement Oversight Authority.

Unscheduled meetings

The EMU report recommends that action be taken against the board chairman for misusing a company vehicle and that he refunds Sh1.8 billion, cash paid for attending unscheduled board and sub-committee meetings.

"The inspector general, State Corporations should surcharge the board chairman Sh6.06 million being expenses for a motor vehicle irregularly assigned contrary to the office of the president circular of March 24, 2005,"said the report.

The board is said to have interfered with the tendering process, including attempting to sign a deal with a Korean firm for a kiln upgrade and ignoring advice by the firm’s technical committee.

The suspended EAPCC board is also accused of colluding to dilute Government shareholding.

There are allegations that the board was overpaid for unscheduled meetings, causing the firm to lose an estimated Sh13 million.

While directors of Bamburi Portland also sit on the EAPCC board, the firm is accused of supplying products to Portland, raising issues of conflict of interest.

There are allegations that the EAPCC board colluded to dilute Government shareholding in the company, effectively changing its status from parastatal to a private company.

The search for a solution to the management wangles at EAPCC, now a subject before the law courts, is expected to be sorted once a ruling is made.

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