Firm writes to EACC to probe Sh1.9b KDF debt for supplies

The Integrity Centre that hosts the Ethics and Anti-Corruption Commission offices in Nairobi. [File, Standard]

A company that supplied the military with goods worth over Sh1.9 billion is questioning who squandered their pay after the National Treasury released the funds in 2024.

M/S Aero Handling EA claims that top government officials in the Ministry of Defence (MOD) and National Treasury have failed to explain where the Sh1,957,597,000 disappeared to after it was released to pay for the delivery of goods back in 2019.

In a complaint letter to the Ethics and Anti-Corruption Commission (EACC) and the Auditor General (AG), the firm's Director Tom Awili said Treasury procured and released the funds to the Principal Secretary MOD to pay the pending bill amounting to Sh1,957,597,000 sometime in February and March 2024.

"After the due process and approval of this pending bill request which included processing through the offices of the Attorney General (AG), Auditor General and The Controller of Budget among others, the Treasury was able to subsequently procure and release the funds to the PS MOD to pay this pending bill amounting to sh1,957,597,000 sometime in February and March 2024,” read the letter to EACC.

Mr Awili said the Kenya Army Headquarters, Defence Forces Ordinance Depot (DEFOD), The Office of the Chief of Defence Forces and the office of Principal Secretary MOD Patrick Mariru are well aware of the said tender.

He said after the release of the funds, they proceeded to make constant follow-up thorough the Office of Principal Secretary MOD, Chief Finance Officer, Head of Accounting Unit MOD and the Assistant Chief of Defence Forces Personnel and Logistics for Their pending bill payment to be released to them which was unsuccessful.

Further Awili also confirmed that on receipt of the AIE and Exchequer to pay the pending bill from Treasury sometimes in February/March 2024, the PS MOD instructed the head of accounting unit to process the payment to be released to the firm commercial bank account held in Paramount Bank.

"However despite these instructions having being released by PS MOD and head of accounting unit to Central Bank of Kenya (CBK), the firm has never received payment to date, raising serious queries as to what could have transpired when the instructions to release the funds were received at CBK," said Awili.

The Director said they subsequently made a formal complaint to EACC in a letter sent via email dated March 14 2025 with a hard copy sent and received by the EACC offices on April 14 2025 when the firm suspected possible misappropriation and fraud of the pending bill funds.

In a response letter from EACC forensics department dated June 16 2025, the firm was advised to seek legal redress from a court of competent jurisdiction to recover their monies owed.

"Following the letter from EACC forensics Department , It is the firms belief that this pending bill funds were misappropriated through a deliberate fraudulent scheme which was supervised by a syndicate within the MOD  The National Treasury and CBK," read a letter to the EACC.

According to M/S Aero Handling, for six years the firm has faced frustrations over the payment of the said monies over the supply tender to the MOD.

Awili said that company participated in an open tender No MOD 423 / (07057) 2016/2017 and was awarded the subject tender vide notification of award letter ref: MOD 09/lSA/VOL.LX/54 and dated October 3, 2017.

He said that a supplementary contract was subsequently revised and awarded to the firm vide Notification of Award ref: MOD 09/lSA/VOL.LXIV/255 with the supplementary contract signed by the parties on May 9 2019.

“The Firm was thereafter subsequently requested to offer supplies of goods by Kenya Army through their Procurement arm DEFOD and the firm proceeded and imported the goods and consigned the goods to the MOD vide BL NO 142951743467 as is the normal practice due to Tax Exemptions of all military related supplies,” said Awili.

In a letter addressed to the EACC and Auditor General, the firm wants investigations on the serious misappropriation and fraud on senior government officials in the MOD including the former Cabinet Secretary Adan Duale and senior officials in the Treasury.

He said the firm also approached the late Prime Minister Raila Odinga to help them get paid the monies. The director said the firm has being distressed over the last six years now following non-payment of approved and released pending bill for contractual services rendered to the MOD following a bidding and award of an open tender.

Awili said they repeatedly tried to amicably seek intervention from MOD and Treasury but no one is explaining where the monies disappeared to.

“We have sought the intervention of your office with full Knowledge that exposing this misappropriation and fraud either through the 4th estate or the concerned Committee of Parliament may put the institutions currently held in high esteem by the larger Kenyan people and International community at potential risk of severe vulnerability of their long held credibility,” said Awili.

He said the company has had a 25 years’ interaction with the Kenya Armed Forces dealing in various projects.

According to Awili, when the goods arrived in the ICD Port in Embakassi, the MOD through Defod promptly cleared the goods and a delivery order No 094360/2019 dated November 4 2019 was issued by Gulf Badr Group on behalf of the shipping line for the goods to be collected from the port by the Kenya Army through Defod.

He said that because of the long period of non-payment even after the contract had being fulfilled, the firm wrote to the Kenya Army headquarters supplies branch in a letter dated February 23 2023 and requesting for mediation, settlement and closure of pending bill owed.

"Upon mediation and verification of all the particulars and performance of the contract, Defod forwarded all the documentation for contractual services rendered through the Kenya Army Headquarters who then subsequently made a procedural request through the Chief of Defence forces for funds to be availed to clear this Pending Bill,” said Awili.

He said in 2023, the PS on behalf of the MOD, did a letter on behalf of MOD requesting for this funds to be allocated and availed to settle the pending bill from the National Treasury.

The Director said the firm has been under severe distress and has consequently faced several auctions by both international creditors and local bankers.

“It is because of this reason that we therefore humbly request for your intervention to avert further severe losses arising from further distress action levied by the international creditors and bankers who have been very patient,” read the letter to EACC.