KICC suppliers paying heavy price for flawed Sh1.9b procurement tenders
By Mwaniki Munuhe
| July 10th 2016
A pattern of suspicious transactions worth Sh1.9 billion that has thrown the running of Kenya’s largest conference centre into chaos, can be revealed today.
Several top managers of the state-owned Kenyatta International Convention Centre (KICC) have been interdicted as the board of directors investigates contracts awarded at heavily over-priced rates and others granted in disregard of procurement guidelines.
Evidence that managers were involved in questionable financial deals has led to the intervention of some of the facility’s top managers.
At the same time, suppliers named in the transactions are fighting with banks for settlement of loans following a decision by the KICC board of directors to nullify the contracts.
A legal opinion sought by the directors has questioned the legality of the tenders, with the board directing the management not to make payments related to any of the firms involved in the suspicious deals.
A case in point is one where KICC management issued a contract for refurbishment of 24 toilets valued at Sh24 million. After completion, the toilets were demolished and a fresh tender valued at Sh39 million for the same work on the same toilets were issued to another contractor.
No explanation was given for the demolition.
In another incident, one contract to do cabro works valued at Sh59.6 million was subdivided into three and awarded to three firms, all belonging to the wife of a senior CORD politician from Western.
Some suppliers however insist their contracts were won fairly, award letters given and that they even delivered quality work within deadlines.
Jacquline Munyiva’s firm was contracted to refurbish the KICC last October for Sh76 million. But payments have not come through, yet.
Her firm, Greenstar System, is in a predicament shared by several other suppliers whose businesses are being ruined by irregular procurement guidelines.
Directors at KICC have since declared the tender won by Ms Munyiva and other companies were illegally awarded and stopped settlement.
While the services were granted and supplies delivered, directors at KICC say they cannot settle illegal and non-binding contracts.
“This is in bad faith,” Ms Munyiva wrote to the parastatal following delays, “That after using the facilities and hailing a successful conference, we are left dangling on loans owed to banks and other creditors.”
It has been a seven-month wait for settlement since the works were completed in early December, paving the way for the five-day WTO conference that closed on December 19.
Munyiva’s firm was awarded the contract to refurbish and customise what used to be the Senators’ private offices at the iconic tower for use by top delegates attending the global conference.
While she has received commendation from the WTO secretariat for “meeting, if not exceeding, quality requirements and specifications”, her 100 employees who did the actual work in day and night shifts have not received their wages.
Other firms whose dues are pending include Dimension Data contracted to provide communication infrastructure.
It is owed about Sh143 million, and Sh20 million payable to Builder 7 Degrees — a construction company that installed soundproofing in the main meeting hall.
A legal opinion sought by KICC indicates that the tenders should be regarded as illegal, and that the institution should take steps to recover down payments made to Ms Munyiva, Dominion Data Solutions and Builder 7 Degrees, collectively worth Sh47 million.
In the meantime, a major standoff is ensuing between the agency and the suppliers. Already, the Ethics and Anti-Corruption Commission has questioned board members over the botched procurement for tenders worth Sh600 million, including Ms Munyiva’s.
But interdicted Managing Director Fred Simiyu has in the past traded accusations with the board, including the chairman who is also former South Mugirango MP Omingo Magara.
The former MD alleges the board members had an interest in swaying the procurement process to favour certain firms.
“The fact of the matter is that the management led by Simiyu and Finance Manager Mohammed Oloo decided they were not going to follow the law. They dished out contracts without documentation. When the board came in on April, we discovered that too much theft was going on at KICC and it was aided by the management. A conferencing equipment that the management had awarded at Sh597 million was later supplied by a South African company at less than Sh300 million. This is corruption fighting back but we will stand for what is right and just,” Mr Magara told The Standard on Sunday yesterday.
Before the EACC investigation, the Magara-led board carried out a probe where it questioned several senior managers in a process that culminated in the interdiction of Mr Simiyu and the general manager in charge of Finance, Mr Mohammed Loo.
Beverly Simiyu (no known relations with the former MD) — General Manager in charge of Sales and Marketing — was suspended but the board did not find a strong case to indict her.
Ms Simiyu sat on the tender committee which the board found had not approved any of the tenders.
In his defence, Mr Simiyu pleaded innocence and accused one of his juniors of awarding major contracts irregularly.
The former MD claims he only signed award letters prepared by Joel Terer, the General Manager in charge of Operations.
“I cancelled the award after noticing that the GM operations just drafted the award letter without following the due process for my approval,” Simiyu told the board during a disciplinary meeting.
He had been invited to defend the award of more than 22 tenders to various companies without bidding in what has come to shed light on the suspect behind-the-scenes dealings.
He told the board that he cancelled 10 of the tenders, including a Sh598 million tender for the supply and installation of conferencing equipment after learning that the procurement procedures had been abused.
The conferencing equipment include headsets and translation equipment that was in the end acquired at Sh280 million from a South African firm, after the initial tender won by a local firm was terminated.
In reaching the decision to sack the chief executive, the board cited that Simiyu was engaging in a blame game with the general manager, yet he had the overall responsibility.
“Mr Simiyu has once again placed the responsibility of the award on the GM — Operations without denying the fact that he in fact awarded the contract without following due process. He remains accountable in terms of his responsibility to KICC on matters of procurement and allegations relating to the GM are immaterial,” reads part of board minutes.
Most of the tenders were awarded irregularly with the potential to cost the public institution hundreds of millions of shillings in lost value for money.
Interviews done by the board on several senior managers suggest widespread forgery of tendering documents, including fake minutes of meetings that never took place.
Head of Supply Chain Maurice Anyango, who would typically be involved in all acquisitions, told the directors that none of the tenders were awarded by the Tender Committee.
“Maurice Anyango further confirmed not being involved in the preparation of the contracts and neither did he verify any invoices before payment was done,” the board reported after interviewing Mr Anyango.
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