Rot in rural power agency exposed

Kenya: Junior staff and contractors conspired to fleece the Rural Electrification Authority (REA), a report by Auditor General Edward Ouko has revealed.

The special report filed with a parliamentary watchdog committee shows the staff used forged documents, stolen cheques and took advantage of poor record keeping at the parastatal to swindle cash and goods worth millions of shillings.

 The plum agency, which has a budget of more than Sh9.5 billion in the current financial year and Sh7.5 billion earmarked for the next financial year, is tasked with connecting over 12,000 schools to the national grid in readiness for the roll-out of the laptops project.

The auditor general has now recommended that three suppliers be blacklisted and barred from ever dealing with the authority because of the fictitious documents and the devious schemes that were used to fleece REA.

Mr Ouko said he was worried that one supplier has been embroiled in lengthy court disputes with the authority, adding that the amount involved is Sh82 million. But since the matter is in court, he declined to give a verdict. The firm involved is Patmose Technical Services.

The report details how a storekeeper was fired because of accepting and logging in as legitimate a fictitious receipt from Diesel Care Limited, which had failed to supply material worth $905,170 (Sh80 million). One of the officers realised the irregular transaction and reversed it.

But it is the blatant theft of supplies that left the auditors shocked. They note that nine people in four trucks drove into the REA yard in Mariakani and using duplicate keys, they accessed the stores and loaded equipment (aluminium conductors) onto the trucks.

The guards realised something was amiss and called the police.

"The suspects were arrested and arraigned in Mariakani Law Courts where they were charged with stealing the drums of aluminium conductors worth Sh10 million," the auditor noted in his report.

They were acquitted, the trucks released, and REA told to pick the material from the police station where it was held as evidence.

But to date, the supplies have not been released.

"The conductors should be put to good use in line with REA's mandate," the report partly reads.

Another case involved a supplier with a Sh23.5 million contract for the supply of power poles in Kisumu. When part of the payment was made, it was done to a wrong person – Geowani Investments, instead of Geowan Investments.

 

"It is evident that Geowan Investments raised two invoices for the same delivery note. Therefore, Geowan Investments could be culpable or privy to the scheme that made REA make the payment of Sh5.5 million to the Equity Bank account," the report said.

  TAME MALFEASANCE

Though as of January 31, 2015, when the audit was done, Geowan was still pursuing REA to pay up the money, the auditor says the whole scheme reeked of a premeditated plan to siphon funds. The auditor said the company should now be suspended.

Ouko now wants REA to put up financial control mechanisms to tame malfeasance.

"This will ensure that any missing document, irregular or forged transactions are detected or prevented before any fraudulent activity," the auditor said. The Speaker referred the matter to the Public Investments Committee for scrutiny.