I disclosed conflict of interest in KPC deal, Ngumi tells MPs

From Left: Kenya Pipeline Company Secretary Gloria Khafafa, MD.Joe Sang and Board Chairman John Ngumi when they appeared before the National Assembly Public Investment Committee on audit queries at Parliament on Friday. [Boniface Okendo, Standard]

Kenya Pipeline Corporation (KPC) board chairman John Ngumi has denied any impropriety in the financing of the Sh48 billion Mombasa-Nairobi pipeline.

Mr Ngumi has been under siege, with questions of conflict of interest being raised following revelations that he was the lead negotiator for Stanbic Bank in the financing of the pipeline when he was an employee at the bank.

Stanbic was a member of the consortium of local and foreign banks that won the bid to finance Sh35 billion for the pipeline, with the corporation providing Sh13 billion.

But in a curious turn of events that has raised questions, Ngumi left the bank while he was still leading its negotiation teams and joined the KPC board as the chairman upon being appointed by President Uhuru Kenyatta, while the deal between the state corporation and the banks was still ongoing.

Yesterday, he told Public Investment Committee of the National Assembly that upon his appointment, he immediately notified the Head of Public Service of the possible conflict of interest.

He said he kept off deliberations on the deal until it was signed.

“I categorically deny any accusations that may be levelled against me. I disclosed to the appointing authority that I was conflicted because I was the lead negotiator for Stanbic,” he told the committee chaired by Mvita MP Abdulswamad Nassir.

“If anybody was to prove that there was an integrity issue, I would quit my position,” he added, disclosing that the only time the matter was handled by the board was when the agreed deal was forwarded to them for approval and signing.

Disclosure letter

Nassir directed Ngumi to furnish the committee with the letter he wrote to disclose a possible conflict of interest.

Meanwhile, the committee members took to task Petroleum Cabinet Secretary John Munyes over his directive for a fresh audit on the extra Sh18.9 billion claim demand by the contractor for the extension of time on the project.

Munyes was hard-pressed to explain why he had written to Ngumi, directing that the board hires another party to re-evaluate the claim when another firm had considered the claim and reduced the amount to Sh4.4 billion.

Munyes said the decision to ask KPC to contract another consultant was arrived at after an inter- ministerial meeting agreed that the government was anticipating more claims in the near future.

Another audit

“We decided that KPC engages another scheduler to look at the whole process because as we speak, we are certain that more claims will be put forward and that would lead to loss of funds if we don’t look at these issues properly,” he told the committee.

But when Ngumi and KPC managing director Joe Sang later appeared before the committee, the board chairman said they had not immediately taken the directive by Munyes, as they also did not understand what was wrong with the work done by the firm that evaluated the claim.

“Although it is a directive, we cannot just take it until we understand what the second scheduler is to do that was not done by the first scheduler. We tasked the MD to write to the cabinet secretary seeking clarification and we are still waiting for the response,” said Ngumi.

KPC management had agreed to pay Zakhem International Sh4.4 billion, down from the claim of Sh13.9 billion to cover the four-year delay that hit construction of the 450-kilometre pipeline.