Business scandals that rocked 2017
By Lee Mwiti | December 30th 2017
From potential home owners who had their bank balances disappear into thin air after falling for cheap housing and land-buying scams, to the collapse of Sigiri bridge, 2017 was a year that never lacked scandals.
The real estate proved a god-send haven for fraudsters and scammers who capitalised on Kenyans' raw appetite for land and houses, to leave behind a trail of broken dreams and empty bank accounts.
Simple Homes Housing Co-operative, a firm that had promised prospective members affordable mortgages on property, turned out to be one of the greatest real estate con in the country.
Launched in 2015, Simple Homes promised potential home owners a low-cost model of obtaining a home under an Islamic financing product, Musharakah.
This meant that prospective home owners would co-own their houses with a sacco without being charged any interest.
A Sh6 million home would, therefore, retain this price until the end of the repayment period.
The bait here was the non-payment of interest, which had many potential home owners hooked. The bubble started to burst first through social media.
People started questioning the practicability of mortgage terms that went up to 40 years.
Those who had sunk their money into the sacco lost about Sh500 million as the company went under.
The police started to unearth an elaborate con-scheme that was neatly put together by a former Mombasa con artist.
POLICE MEDICAL COVER SCHEME
A parliamentary committee led by Garissa Senator Yusuf Haji exposed the difficult working conditions endured by members of the over 107,000 disciplined police forces.
The revelation led to an uproar, with the public, civil society and some politicians condemning the neglect of the forces.
Mr Haji brought before the National Assembly recommendations on how the National Police Service could be improved. One of the proposals was that the police force be given a comprehensive medical insurance cover.
A deal was struck, and a Sh18 billion cover was to be provided by a consortium of insurance companies, with AAR being the lead insurer and AON Minet the administrator. The others were Jubilee Insurance and UAP Insurance.
Under the new scheme, the lowest-ranked officer - a constable - was allocated a cover of Sh150,000 for out-patient services, and Sh1.5 million for in-patient care annually.
The highest-ranked officer, on the other hand, got Sh500,000 for out-patient cover and Sh5 million for in-patient care.
The intrigues saw the State take away the medical cover from the private insurers and hand it over back to NHIF.
SIGIRI BRIDGE COLLAPSE
The Kenya Urban Roads Authority awarded the Chinese contractor China Overseas Engineering Company (COVEC) a Sh1.2 billion tender for the construction of a bridge in Sigiri in Budalang’i sub-county, Busia County.
The design and construction period was earmarked for 18 months while the maintenance period was five years.
But the Chinese company went completely out of plan. A technical report by the ministry on the collapse of the bridge blamed wrong scheduling in the placement of concrete. The company was also accused of undertaking works outside the authorised hours. COVEC undertook to construct the bridge afresh.
TENDER WARS IN WATER AND IRRIGATION MINISTRY
In March, the Agriculture parliamentary committee summoned Water Eugene CS Wamalwa to try and understand how a Sh62.3 billion tender for construction of Thwake dam was awarded to the second lowest bidder.
Mr Wamalwa argued that despite seeking advice from himself, the Attorney General, the project financier — African Development Bank — and the Ethics and Anti-Corruption Commission, who all advised that Irrigation Principal Secretary Mwangi Nduati awards the contract to the lowest evaluated bidder, Mr Mwangi still insisted on awarding it to the second highest bidder.
Sinohydro Tianjin Engineering Ltd was thus awarded the tender at a cost of Sh39.5 billion.
The Public Procurement Administrative Review Board in April faulted Mr Mwangi’s decision to award the contract to Sinohydro.
CHOLERA DURING KENYA TRADE WEEK
Industrialisation CS Adan Mohammed, Trade Principal Secretary Chris Kiptoo and Treasury CS Henry Rotich, were reportedly taken ill with cholera after consuming food served during the Kenya Trade Week held at the KICC, Nairobi, between July 10-12.
At least 50 other conference delegates were also affected.
The company offering catering services during the event was finally blacklisted and a certain hotel closed for sometime.
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