Najib Balala walked down the stairs of the Kenyatta International Convention Centre last December, breathed a sigh of relief amid a major procurement scandal that nearly stained Kenya’s image, irredeemably.
Preparations for the iconic venue in downtown Nairobi for the World Trade Organization (WTO) talks was in top gear, but there was an emergency.
Critical conferencing equipment including translation systems and headsets had not arrived in Kenya on that Thursday afternoon; not even the South African supplier had been notified. It was only three days to the start of the global conference that was being held in Africa for the first time.
“We are satisfied with the progress we have seen here,” Mr Balala said at a press conference organised to reassure the delegates that Kenya was ready to host the WTO meeting.
But behind the scenes, senior officials may have panicked on the prospect of failing to host the conference despite Kenya having been granted at least 10 months to prepare. Business Beat today delves into the procurement blunders that nearly cost the country an estimated Sh2.6 billion spent by more than 3000 global leaders including Presidents in hospitality and travel.
Confidential procurement documents have revealed of a massive fraud scheme where managers single-sourced for equipment and services. Prices were overly inflated leading to the cancellation of tenders and subsequently, delays in delivery while the contractors were on site into the wee hours of the morning the conference opened. In the end, Kenya had narrowly survived a major embarrassment.
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The potentially disastrous situation was saved after the intervention of four different ministries in fast-tracking clearance of the equipment. Then KICC Managing Director Fred Simiyu was kicked out, reportedly for his involvement in the procurement blunders. While it was clear from February last year that the venue would host the high-level meeting, it was not until December 11 – with only 48 hours left that a supplier was selected to deliver microphones, headsets and interpretation equipment.
Major agreements governing international trade cited as the ‘Nairobi Declaration’ were reached from the five-day meeting that started on December 13. “In order to facilitate the clearance of the Conference Management System in time for the Ministerial conference, the Cabinet Secretary, National Treasury on December 4, 2015, approved the release of the system by the Kenya Revenue Authority pending payment of the relevant taxes by either the Ministry of Tourism or the Kenyatta International Convention Centre,” a letter from the National Treasury head offices reads in part.
Congress Rental South Africa had been picked as the supplier of the conferencing equipment, but stood no chance of delivering them on time owing to the lengthy clearance process that also involves inspection of any imports. Wanyambura Mwambia, signing for Kamau Thugge, the Permanent Secretary at Treasury, was writing seeking a waiver from KRA’s Commissioner for Customs allowing applicable taxes to be paid after the goods had been cleared for the sake of time. The facilities, technically known as Conference Management System (CMS), are the core of such meetings where dozens of nationalities speaking various languages attend.
Daily press briefings
Mwambia’s letter tells of the frantic last minute efforts by Kenya to save face after being the first country in Africa to host the WTO conference.
Mr Balala requested his Industrialisation colleague Adan Mohamed to intervene and have the Kenya Bureau of Standards waiver the pre-shipment inspection for the CMS as the only way the equipment would arrive on time.
“One of the key requirements of the event is the procurement of the CMS equipment without which the conference shall not take place,” reads Balala request to Mohamed. Balala and his Foreign Affairs counterpart Amina Mohamed pitched tent at the KICC grounds for more than 10 days as it became clearer that requisite preparations were far from complete. And in more than any other period, the two ministers held daily press briefings to defuse fears of lagging preparations, as the core team from the WTO was watching over the near-stalled progress.
With only hours to the opening of the conference, the contractors left the venue the night before in a near miss whose details are only coming to light.
But it is a case of mega-corruption relating to the Sh1.9 billion-worth tenders where the managers selected suppliers without competitive bidding, including the Sh597 million for the CMS.
KICC would in the end spend less than Sh250 million for the conferencing equipment, despite the last minute procurement to suggest that there could still have been a much better deal had the tendering been competitive. With less than two weeks to the conference, Simiyu – the former KICC managing director was sacked alongside some of the top managers over the procurement of equipment and rehabilitation of the conference tower, meeting rooms and the parking area.
In total, there were 22 contracts which a review done by Ogetto, Otachi and Co Advocates appointed by the KICC management unveiled major procurement issues on all tenders.
Kennedy Ogeto, the managing partner of the law firm, advised KICC not to pay nearly Sh300 million for services already delivered citing that the procurement was fraudulent.
He cites that the procurement was irregular and that the law allows an entity to dishonor a fraudulent tendering process. “Since the letters of offer and the contracts appear tainted with illegality hence null and void, any officer of KICC who authorises payments relating to the supposed awards exposes themselves to prosecution under the Anti-Corruption and Economic Crimes,” Mr Ogeto says in his legal advisory.
Among the local firms that have not been paid are Dimension Data that was given two contracts worth Sh154 million, Rostrum East Africa contracted for Sh14.9 million and construction firm Builders Seven Degrees awarded tenders worth Sh59.6 million. Dimension Data is also a South African firm which in 2014 acquired Kenya’s listed internet service provider Access Kenya and took its shares off the Nairobi Securities Exchange. The law firm reported that KICC should surcharge Dimension Data for the Sh10 million in down payment received, and Sh37 million already paid to Builders Seven Degree Limited.
Mr Simiyu had on July 13, 2015 awarded the tender to supply the CMS to Dominion Supplies for Sh597.6 million, in what the law firm said was illegal as the management did not invite bids. The tender was however cancelled exactly four months later after the intervention of the newly-installed board of directors, less than four weeks to the opening of the critical conference.
Weeks after the conference was concluded, KICC General Manager in charge of finance Mohammed Loo was sacked in a letter date January 21, 2016.
Chairman of the parastatal Omingo Magara wrote to Mr Loo that investigations had revealed that the procurement was irregular and that he, the finance director, should not have made the three payments to Builders Seven Degree and Dimension Data. “That specifically, you irregularly and unlawfully authorized payments to M/S Greenstar Systems Limited and Builders 7 Degrees Limited of Sh10 million and Sh37 million respectively, without proper documentation,” Mr Magara’s show cause letter to Loo reads.
Mr Magara, fellow directors and other senior managers were last week questioned by the Ethics and Anti-Corruption Commission over the tainted procurement deals. Among the issues that the EACC is seeking to investigate is how the board settled on the South African supplier of the CMS equipment, face-lift and partitioning of the meeting halls.