Former Transport Cabinet Secretary James Macharia and Kenya Railways Managing Director Philip Mainga are in a spot over the unlawful award of a tender to a firm linked to former Mombasa Governor Hassan Joho.
The tender was for the transport of cargo from the Port of Mombasa.
According to a report tabled before the National Assembly Transport Committee by Deputy Auditor General Fredrick Odhiambo, Macharia and Mainga failed to make the process open to interested stakeholders to ensure fairness, transparency, equity and cost-effectiveness.
The report also indicated that the ministry and Kenya Railways failed to conduct an independent valuation before the execution of leases for an investment in a capital project of such magnitude.
“These infractions could have exposed the government, taxpayers and other partners to litigation risks,” stated the report.
Odhiambo told the committee that there was no transparency in the contractual agreement between Kenya Railways and Auto Ports Freight Terminal Limited- a firm linked to Joho’s family- for the transportation of cargo by the Standard Gauge Railway (SGR).
The Auditor General warned that Kenya Railways could be losing revenue as a result of irregular leasing of the Nairobi Freight Terminal (NFT) to M/s Autoports Freight Terminal Limited.
According to the special audit report, Kenya Railways as a procuring entity was wrong in entering into a contract with M/s Autoports on terms that were not approved by the board.
The Auditor General found that the procedure followed to have a contractual agreement between Kenya Railways and M/s Autoports Freight Terminal Limited was not transparent and lacked the requisite documents with a clear audit trail as opposed to the similar agreement between KR and M/s Grain Bulk Handlers Limited (GBHL).
Particularly, the office of the Auditor General was concerned that Kenya Railways did not adhere to the provisions of section 11A of the Kenya Railways Act, Cap 397, the Public Procurement and Asset Disposal Act, 2015, and the Public-Private Partnerships Act, 2013 in entering into the lease agreement with M/s Autoports Freight Terminal Limited.
“There were red flags considering the contradicting communication evidenced in the board minutes, the appeal by M/s Autoports, and the communication by KR on the board resolutions,” reads the report in part.
The Transport committee led by Ndia MP George Kariuki has started a probe premised on the special audit and will interrogate the parties of interest.
“This is a special audit that we must use to identify people of interest around this subject and give them a chance to be heard. We want to get the persons themselves that made the decisions. That is the people that made the infractions and ensure they are brought to book,” said Ruaraka MP TJ Kajwang.
The committee further said that it would conduct site visits to the port, M/s Autoports Freight Terminal Limited and Kenya Railways.
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