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The shocking verdict on Sh5 billion NSSF project

By By RAWLINGS OTIENO | Apr 18th 2014 | 5 min read
The chairman on the Commission of Administrative Justice Otiende Amollo addresses the Press on their verdict on Tassia II tender process. Next to him is vice chairperson Dr Regina Mwathe. [PHOTO: Tabitha otwori/STANDARD]


Kenya: Newly appointed managing trustee of the National Social Security Fund (NSSF) abused his powers with regard to a controversial housing project in Nairobi County.

A report released Thursday by the Commission for Administrative Justice (CAJ) headed by lawyer Otiende Amollo indicts NSSF boss, Richard Langat over alleged misuse of public funds and maladministration (inefficient or dishonest administration) with regard to the Sh5.03 billion Tassia II project in the city’s Eastlands.

It questions how consultancy fee for the project was increased by 423 per cent, from the original Sh81 million to Sh423 million, yet no consultancy was done. The fee was increased by Sh343 million, for which Amollo wants Langat and the Board be investigated.

According to the Ombudsman — an official appointed to independently investigate individuals’ complaints against maladministration by public officials — the Ethics and Anti-Corruption Commission (EACC) and the Director of Public Prosecutions Mr Keriako Tobiko, should determine whether the accusations against Langat are serious enough to warrant his prosecution.

Amollo is firm in his conclusion that that Mr Langat, as the Managing Trustee of NSSF, must bear responsibility for the improper award of the Tassia II tender China Jiangxi Kenya Limited.

“The Ombudsman wants Mr Langat the Managing Trustee of NSSF held responsible for the flawed management of the project, including the tendering and approval process,” said Amollo.

The damning report follows investigations into the project and vindicates concerns raised by Central Organisation of Trade Union (Cotu) Secretary General Francis Atwoli who first blew the whistle on the project, saying it was irregularly approved.

Atwoli’s stand put him at odds with Labour Cabinet Secretary Kazungu Kambi who has since led a Government offensive to weaken Cotu and replace it on the NSSF board with the Public Servants Trade Union (Pusetu). Kambi defended the NSSF management and dismissed Atwoli’s allegations.

Also targeted for removal from the NSSF board was the Federation of Kenya Employers (FKE), whose chief executive Jacqueline Mugo backed Atwoli’s stance on the Tassia II project.

The NSSF board has the final say on all contracts by the cash-rich fund. In January, Atwoli stunned a Mombasa crowd when he accused Kambi of trying to convince him to irregularly approve tenders at NSSF.

 “What we are requesting is for the President, who is a good friend of mine since the days of Kanu, to sack this man (Kambi),” said Atwoli.

At the time, Langat defended the project, telling The Standard that “The tender process and outcome was open, transparent and above board. The tender documents are available for scrutiny by any interested party.”

Kambi also backed Langat saying: “As per the tender requirement, the tender was awarded to China Jiangxi International Kenya Limited as the lowest evaluated bidder.”

But FKE Chief Executive Jacqueline Mugo faulted the award of the tender in a press advertisement.  “It is also worrying to witness the hurried manner in which a project purportedly approved on December 18, 2013 has already been awarded to a contractor,” she said.

Sh11.2m receipt

Amollo said CAJ’s investigations revealed that NSSF did not meet the pre-approval conditions of the Nairobi City County for the project. He said Langat misled the CAJ by submitting a copy of a receipt for Sh11.2 million allegedly paid to the County Government of Nairobi as fees for inspection and submission of the project’s plans. “The Ombudsman has confirmed that the Nairobi County Government did not receive the payment of the said monies and the receipt submitted was in fact an invoice,” said Amollo.

He said the procurement was mismanaged and approval done electronically by four out of the six board members contrary to the requirements of the law.

The detailed report by the Ombudsman indicated that the opening, evaluation and award of the tender was rushed with the three processes taking place in just three days, while the approval was sought via email a day after it had already been awarded.

But CAJ has exonerated China Jiangxi International (K) Limited of any malpractice. The firm was awarded the tender whose initial cost was to be Sh4.64 billion. However, according to CAJ’s investigations, the NSSF tender evaluation committee altered the figure submitted by China Jiangxi to Sh4.69 billion, an act CAJ said is tampering and a violation of procurement rules and regulations.

The Ombudsman wants that the anti-graft agency to swiftly and speedily investigate to determine whether the irregularities in the approval and tendering process for the project were occasioned by corrupt intent on the part of the NSSF board and management and take appropriate action.

Already the Ombudsman has written to the Cabinet Secretary for the National Treasury, Mr Henry Rotich to review, restructure and rationalise all procurement laws, rules and regulations with special focus on pricing, quality of goods and independent assessment for projects involving colossal sums of money.

Amollo also wants the Kenya National Audit office to audit NSSF’s records to ascertain the payment of Sh11.2 million Langat claimed was paid to the County Government of Nairobi.

In the event that the money was forwarded to NSSF consultant M/S Multiscope Consulting Engineers Limited, the commission recommends that its directors refund the money with interest at market value and also be blacklisted from future Government contracts.

“The person who received the Sh11.2 million should be prosecuted for obtaining money by false pretence and the entire approval should be looked at, revoked and withdrawn due to glaring irregularities,” reads the report.

Board meeting

NSSF procured the services of MultiScope Consulting Engineers Limited to design work and cost the estimates for the Tassia II Infrastructure Development Project and made advertisement without a budget, said Amollo.

The CAJ report indicates that there was no formal board meeting for members present to vote and make decisions regarding the approval of the contract as required by law, and the board meeting lacked quorum at the time because Cotu and FKE were not represented.

The approval also sidelined the Finance, Social Security and Investment Committee chaired by Atwoli, which is required by law to approve and recommend all financial transactions for consideration by the NSSF Board. The report also recommends that the Board of Trustees who participated in the irregular approval of the project should jointly and severally be held responsible for any losses the fund may have incurred in the contract.

Apart from that, the commission also found the board Chairman Adan Mohamed culpable of negligence in the performance of its supervisory role for failing to question the mode of approval for the project, and overseeing an irregular tendering process.

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