19 face fraud charges in Sh4.1b mall probe
By Paul Ogemba
| September 10th 2019
At least 19 suspects were yesterday charged with conspiracy to defraud public funds in the construction of the multi-billion-shilling Lake Basin Development Authority Mall in Kisumu.
Bobasi MP Innocent Momanyi, Kisumu County Assembly Speaker Onyango Oloo and LBDA managing director Peter Abok are some of those accused over irregular award of the contract to Erdemann Properties Ltd after allegedly inflating the cost from Sh2.5 billion to Sh4.1 billion.
They faced 30 counts, which were consolidated in two files to bring to an end more than five months of investigations.
The prosecution said it had collected more than 15,000 exhibits and documentary evidence, and lined up 65 witnesses to prove theft of public funds.
The prosecution’s case cited a well-planned conspiracy to defraud. At least Sh1.5 billion is said to have been lost in the construction of the iconic LBDA Mall on the Kisumu-Kakamega highway.
“The project was to cost Sh2.4 billion, but by the time it was completed, the total cost had been inflated to Sh4.1 billion. The amount was inflated through conspiracy by officials and without following any due process,” the prosecution said.
Also not spared were the directors of Erdemann Properties Ltd Zhang Jing and John Zeyun Yang, who the prosecution claimed used underhand deals and bribery to win the contract despite not having the required qualifications to undertake the construction.
Others were LBDA board of directors’ George Odawa, Anthony Kiprono, David Oyosi, John Mango, John Onyango, Boniface Simba, William Omoding, Jimmy Nabwera, Alex Mukabwa, Mary Micheka, Kennedy Musebe, Michael Obora, Joash Odhiambo, Dennis Mulaa and Josiah Okumu.
According to the charge sheet, the scandal began when tender evaluation committee members Anthony Kisaka, Nelson Onyango, Henry Odindo, Emmanuel Songoro, Moses Wekesa and Godfrey Mwangi evaluated the bid by Erdemann although it failed the mandatory requirements.
The group faced a charge of willful failure to comply with procurement regulations by irregularly recommending Erdemann to construct the mall. It made the recommendations to the LBD board of directors, who went ahead to award the contract through inflated costs and allegedly received kickbacks totaling Sh1.2 billion.
“Between December 18 and December 19, 2014, being members of LBDA board of directors, improperly conferred a benefit of Sh1.3 billion to Erdemann Properties Ltd by irregularly approving the variations of the contract for the LBDA Mall from Sh2,451,035,643 to Sh3,751,035,643,” read the charge sheet.
Abok, Oloo, Odawa, Odindo, Momanyi, Ogunde, Ogenge, Owino, Jing, Yang and Edermann Properties were further accused of conspiring to defraud LBDA Sh667,275,202 in respect to the tender for construction, development and financing of LBDA Mall.
Abok and Oyosi faced another charge of failing to comply with procurement rules by signing the contract with Erdemann before the lapse of 14 days of awarding the contract.
The MD and the Kisumu County Speaker were also accused of charging the land’s title to secure a loan of more than Sh2 billion without the approval of the Cabinet Secretary and National Treasury.
In another charge, Oloo was accused of failing to disclose a private interest in the transaction. The prosecution claimed despite being the LBDA chairman, he failed to disclose that he was a legal consultant for Erdemann Ltd and participated in the decision to award it the contract.
The company’s directors Zhang Jing and Zeyun Yang were accused of illegal acquisition of public property while a board member, Odawa, was accused of receiving Sh7.6 million from the company as an inducement to influence the decision of the board to award the contract.
Oloo faced another charge of receiving Sh15 million from Erdemann as inducement to influence release of funds to the company.
Anti-corruption court chief magistrate released Abok, Momanyi and the company’s directors on Sh10 million cash bail, while Oloo and the LBDA board members were each granted Sh6 million cash bail.
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