Who is fooling whom in the Sh5 billion NSSF Tassia infrastructure project?

Powerful interests are behind the boardroom wars at the National Social Security Fund (NSSF) that have turned into a vicious public battle over a Sh5 billion project in Nairobi whose initial cost was Sh3.3 billion in 2011.

It has turned out that the Tassia II infrastructure development project was first discussed and approved by the NSSF board two years ago, even as some members disowned the approval claiming it was on condition NSSF recovers funds owed to it by the tenants.

The dispute comes after President Uhuru Kenyatta assented to a law that, among other reforms at the giant pensions fund, increases contributions to NSSF to six per cent of an employee’s salary with the employer matching the amount. NSSF has in the past been rocked by multi-million- shilling scandals, leading to questions over its ability to manage more funds.

Documents seen by the Sunday Nation show the project was discussed and approved at the 154th Board of Trustees meeting on August 5, 2011, at 7.30a.m.

The meeting also approved the fee of Sh21 million for the project consultant, Multiscope Consulting. Records indicate that the board meeting was attended by among others, Cotu Secretary-General Francis Atwoli and Federation of Kenya Employers (FKE) Executive Director Jacqueline Mugo, who have come out strongly to oppose the project.

“The board approved Sh3.3 billion being total preliminary cost estimates of infrastructure and payment of Sh650,000 by plot owners as their contribution towards the cost of infrastructure and professional services,” state the minutes, which were signed by the then Managing Trustee Alex Kazongo.

According to the records, four out of the eight Trustees who attended the meeting have since left the organisation.

Those who are listed on the attendance list and are still serving are board chairman Adan Mohammed, Mr Mutua Kilaka, Mr Atwoli and Ms Mugo.

On Saturday, Mr Atwoli confirmed attending the meeting that approved the project two years ago.  However, he said the project was shot down after Mr Kazongo, who was sacked in 2012, told the board members that it was not viable.

“The condition for approval was clear that the board should try to recover at least Sh1.2 billion from tenants. Wanapekua vitu zilizokataliwa, kutafuta pesa (they are searching the records to look for projects that have been shelved). This time they even bypassed my committee of Finance and Investments. We did not discuss it,” says Mr Atwoli.

According to the Cotu boss, when the NSSF failed to recover all the funds from the 5,500 Tassia tenants as part of their contribution to the project, the then Managing Trustee advised the board “to shelve the project”.

However, it is not clear when the board of trustees changed their minds and revised the costs to the current Sh5.03 billion, which a section of board members have questioned.

Multiple sources within NSSF, who spoke to the Sunday Nation on condition of anonymity, claimed various commercial interests supported by powerful individuals in and outside the board may be behind the latest disagreements.

When he first made the issue public, Mr Atwoli accused some unnamed individuals of attempting to use the project to steal money.  

Currently, the NSSF boardroom is dominated by government representatives after terms of three board members expired last year.

The board comprises the chairman, the Cotu representative, the employers’ representative, Labour Principal Secretary, Finance Principal Secretary, the Managing Trustee and three members from the private sector.

Last evening, we learnt that Cabinet Secretary Kazungu Kambi was expected to appoint three board members before a board meeting is summoned to discuss the project and the disagreements.

However, we also established that there are senior government officials who want the Tassia II contract awarded to China Jiangxi International Limited cancelled.

Bidders who lost to China Jiangxi International have also questioned the bank bid bond (tender guarantee) the company used in the tender, claiming that it was shy of the 148 days requirement stipulated in tender documents.

Saturday, NSSF defended the company’s bank bid bond.

“NSSF extended the opening date for tenders by one week. One of the bidders wrote to our procurement department asking whether the bid will be valid by the time. He sought to know whether he should seek extension. It was escalated to the procurement manager because it was us who extended the opening date and we decided to stay them. Arising from it only one bidder gave 148 days. The rest were 146 days,” says Mr Richard Langat, NSSF acting Managing Trustee.

CHINESE FIRMS

China Jiangxi has so far won two other huge NSSF tenders on Hazina Trade Centre and Nyayo Embakasi estate in the last 12 months.

On Thursday and Friday, Cotu, FKE and NSSF stated their positions on the contract in paid-up advertisements. 

Mr Atwoli, on behalf of Cotu, said the board had not discussed and approved the revision of the project cost to Sh5 billion from Sh3.3 billion. He also took issue with the move to seek approval through e-mail.

“The project is self-financing through sharing of the project cost of Sh5 billion by the estimated 5,500 owners on pro rata basis. Collection will be done through the individual Tenant Purchase Scheme accounts once approval is granted,” says the contentious e-mail dated December 18.

“Board approvals are by resolution where members take a vote and not by circulation. At our last board meeting of December 9, 2013, the acting Managing Trustee never indicated that he intended to call another meeting on December 18, 2013 or do so by way of circulation as he wants the public to believe,” says Mr Atwoli in an advertisement published in the Daily Nation on Friday.

But, in an interview with the Sunday Nation, the acting Managing Trustee said that NSSF board approved circulation of closed mail as a means of communication.

“They have always approved some decisions through circulation of closed mail. This is not new to NSSF,” said Mr Langat, who also said the project had received board approval two years ago.

Mr Langat further explained that five out of six of the board members who received the e-mail approved the revised costs. But Mr Atwoli did not respond to the e-mail while Ms Mugo apparently approved but has since clarified that she raised further concerns with the acting Managing Trustee and Labour Cabinet Secretary Kazungu Kambi.

“I support the proposal given the assurance that it will not pose additional costs to the Fund,” says Ms Mugo in her e-mail that was initially interpreted as an approval.

However, in a paid advertisement on Friday, Ms Mugo argued that the e-mail circulated by Mr Langat “cannot constitute a board approval of expenditure of Sh5 billion of NSSF funds”.

She called for a comprehensive report on the Tassia II Project to be tabled before the board for discussion.

The Ethics and Anti-Corruption Commission says it has launched investigations into the controversial project. In a related development, the Labour Cabinet Secretary has also been summoned to appear before a parliamentary committee on Wednesday.

Mr Atwoli and Ms Mugo are also expected to give their side of the story to the Labour and Social Welfare Committee.