How money was wired from Nairobi to Milan, London and back to Nairobi for kickbacks

Director of Criminal Investigations George Kinoti during National Anti-Corruption Conference on Jan 24, 2019. He says Sh4 billion was re-routed to a bank in London and soon after to another bank in Nairobi. [Jonah Onyango, Standard]

Corrupt Government officials could have pocketed Sh4 billion out of the Sh6.3 billion that was paid upfront to an Italian contractor, detectives have said.

The Sh6.3 billion - 10 per cent of the total cost for the two dams - was wired by Treasury to Milan in Italy in 2017.

However, the Directorate of Criminal Investigations (DCI) says Sh4 billion was re-routed to a bank in London and soon after to another bank in Nairobi.

“We have the account number the money was sent to in London and Nairobi. We don’t know why the money was being sent to Nairobi and that is part of our investigations,” DCI Director George Kinoti said yesterday.

Once in Nairobi, the money was withdrawn in US dollars from a bank in Westlands, Mr Kinoti said. 

“The Italian contractors say they don’t have money because it was taken away. They can’t explain, yet we are servicing a loan as a country. This is sad and merciless,” he said.

Kinoti claimed the Sh4 billion “is in people’s houses.” 

Detectives want to find out why the money found its way back to Kenya in their ongoing investigations into the stalled Sh63 billion Kimwarer and Arror dam projects in Elgeyo Marakwet County.

The Sh6.3 billion was reportedly for mobilisation of resources to enable Italian firm, CMC di Ravenna, start the projects.

The projects were to be undertaken by Kerio Valley Development Authority (KVDA), CMC di Ravena and Itinera of Italy.

According to records at KVDA, Arror Dam was to cost Sh38.5 billion while Kimwarer Dam in Keiyo South was to gobble up Sh28 billion.

Nothing to show

Kinoti said the Government had released Sh21 billion to the project, which is almost 50 per cent of their total cost, yet there was nothing to show on the ground.

Detectives said the Sh6.3 billion was released in 2017 by National Treasury Cabinet Secretary Henry Rotich.  

Kinoti said Mr Rotich was tasked to explain the transfer of the money. Treasury Principal Secretary Kamau Thugge was also questioned over the transfer.

They were also asked why they paid for a project that did not have any design to warrant any action from the Government.

They explained their roles in the projects. Police will make conclusions and recommendations at the end of the investigation.  

Kinoti argued that the project was flawed from the beginning, as the contractors used Itare Dam designs to justify their suitability to begin works at Arror and Kimwarer.

“Investigations have shown the contractors used the Itare Dam project as due diligence to show their financial and technical capacity in order to be allowed, which was flawed,” he said.

Itare Dam has already gobbled up Sh11.5 billion out the Sh28 billion projected as total cost, yet less than five per cent of the work has been done, according to Kinoti.

“I was there and all I could see were heaps of sand and ballast yet Sh11 billion has been spent. Tell them to return the public money,” Kinoti said.

The Itare Dam project is being undertaken by the same Italian company that was to construct Arror and Kimwarer dams.

Kinoti said they were investigating the Itare project separately.

Investigations show the money was used to pay a number of individual companies for supplies of various materials and services.

Some of the directors of the 107 companies appeared before the DCI yesterday and explained that they delivered materials to various construction sites in Eldoret and its environs.

“Some say they delivered the materials to construction sites that are believed to be private, yet they were to take the same to the site of the dams,” said an officer in the investigating team.

Kinoti said he would demonstrate how the fraud was committed in the projects.

“Today the project is supposed to be running, but we understand the company rushed to file liquidity problems in Italy after learning they had been exposed. We will show Kenyans the kind of fraud committed,” said the DCI boss.

CMC di Ravenna, however, said in a statement that neither it nor its subsidiaries had been declared bankrupt.

“CMC has voluntarily engaged in a composition with creditors procedure to ensure it safeguards the interests of all stakeholders (creditors, investors, clients and co-operative employees),” the statement read. “CMC di Ravenna continues to be fully committed to completing the dam project ahead of, or within the contracted time frame.”

The company blamed the slow pace in works on delayed payments. 

According to the company, as of November last year, its forward order book amounted to £4.7 billion, a process initiated by CMC board to ensure full transparency and financial compliance.

Contracted to complete Itare Dam by 2021, the firm said 30 per cent of the work was in the project that started in April 2017.

But the detectives say the projects are among those flagged as white elephants by Auditor General Edward Ouko in his report.

Legal assistance

“Imagine people were paid and no single project is being implemented on the ground,” said Kinoti.

This came as a team of investigators who flew to Rome, Italy to seek mutual legal assistance on various issues on the matter arrived home. The officials included those from the office of the Attorney General and Office of the Directorate of Criminal Investigations.

Directors of the contracted companies have been trooping to DCI for grilling.