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MPs learn of twin firms in Standard Gauge Railway project

By Ally Jamah and Wilfred Ayaga | February 14th 2014
President Kenyatta during the launch of the railway line in Mombasa. The new railway line is a regional project from Mombasa to Malaba, then to Kampala, DRC, Rwanda, Southern Sudan and Ethiopia. [PHOTO: FILE/STANDARD]

By Ally Jamah and Wilfred Ayaga

Nairobi, Kenya: A fresh twist has emerged in the controversial Sh327 billion railway project, with doubts over which firm the Government is dealing with.

MPs heard yesterday that there is a local company registered under the same name as that of China Road and Bridge Corporation, which the Government announced it had given the contract to.

Registrar of Companies Bernice Gachegu told the National Assembly’s Public Investment Committee (PIC) that she discovered in her records last week that two Kenyans had registered a company under the name China Road and Bridge Kenya Ltd in 2008. The Chinese-owned firm was Kenya Ltd in 2008. The Chinese-owned firm was registered as a foreign company in 1984 with 10 Chinese directors.

Directors of the Kenya-owned company are Peter Maingi Gatere and Leonard Mwangi Ndung’u, but no further details about them were revealed yesterday, except that their office is registered in Westlands, Nairobi.

The company has not filed annual returns with the Registrar of Companies for the last six years, as required by law, neither has the Chinese firm for the last 30 years.

MPs questioned the latest development, saying it cast doubts as to which of the two companies actually won the multi-billion shilling tender.

“The more we probe this matter, the more it appears to me like a James Bond film. This appears to be a well-choreographed scheme to rip Kenyans of billions of shillings,” said Igembe South MP Mithika Linturi.

The Registrar said China Road and Bridge Corporation is incorporated in Beijing, China, with 10 Chinese directors and also registered in Kenya as a foreign company.

Separate entities

The Kenyan entity, China Road and Bridge Corporation Kenya Ltd, is incorporated in Kenya with the two directors.

“The two companies are separate entities belonging to different persons. I was surprised when I discovered that anomaly since no two companies are supposed to share similar names that might confuse the public,” noted Gachegu.

The Registrar said she stumbled on the anomaly last week while seeking information to be presented to the committee. The MPs, led by PIC Vice-Chairman Kimani Ichung’wah, demanded more details about the two directors of the Kenyan firm.

Minority Leader Francis Nyenze claimed they could be fronting for powerful individuals who want to fleece taxpayers of their money through the mega project.

The MPs also demanded to know the projects that the Kenyan company has undertaken in the past six years of its existence. At one point, Aldai MP Cornelly Serem demanded the resignation of the Registrar General, claiming she had failed in her job by registering two companies with the same name.

But Ichung’wah ruled him out of order. The Registrar was hard-pressed to explain the double-registration, but said the manual processes of registration and searching of company names used before 2009 were to blame.

“This anomaly is not unique or deliberate. Cases of double registration have always occurred and whenever they do, we inform the company that registered at a later date to change their name or be deregistered,” she said.

The Chinese company was registered in Kenya as a foreign entity under the name of China Road and Bridge Engineering Company, before changing the name to China Road and Bridge Corporation in 1996.

The MPs ordered the Registrar to appear again before them on Tuesday with the full files of the two companies, as well as contact details of their directors.  The Registrar revealed that the penalty for not filing returns in the Company’s Act is Sh1,000 only, and another Sh100 for every day the company continues to default.

File gone missing

She was asked to explain how the file belonging to the company incorporated in Kenya went missing a few weeks ago, when an investigative journalist from this newspaper sought to access it. She said the matter is being investigated.

Meanwhile, Auditor General Edward Ouko failed to produce an audit on the status of the controversial Standard Gauge Railway when he appeared before the PIC.

Mr Ouko told PIC that efforts to gather information had been hampered by the international nature of the project and the report could only be ready in the next one and a half months.

“The Standard Gauge Railway project transcends international borders. Any meaningful audit has to take into consideration this international aspect,” Ouko said.

He noted the parallel investigation by PIC slowed down his office since some of the documents necessary for the preparation of their report were in the hands of the committee.

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