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EACC probes Kebs over vehicle inspection award of tender

Sunday July 05 2020
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Imported second-hand vehicles in a yard in Mombasa on January 15, 2019. The Kenya Bureau of Standards’ tender for the pre-inspection of used vehicles destined for Kenya is under investigation by the Ethics and Anti-Corruption Commission. FILE PHOTO | NATION MEDIA GROUP

By WALTER MENYA

A tender for the pre-export inspection of used motor vehicles coming to Kenya is a lucrative business. At a minimum of $155 (Sh16,500) per vehicle, the tender has over the years attracted fierce and dirty bidder wars, often with the staff of Kenya Bureau of Standards (Kebs) allegedly in the thick of it.

So, when Kebs on December 3, 2019 decided to increase the number of firms providing the Pre-Export Verification of Conformity (PVoC) of standards services for used motor vehicles, mobile equipment and spare parts, it created a storm of controversy.

Quality Inspection Services Japan (QISJ), which had been the sole contractor for the nearly Sh1.5 billion a year tender, was aggrieved that new firms were being brought on board when it had an ongoing contract that ends in April 2021 and quietly protested. Attorney-General Paul Kihara cautioned Kebs that varying existing contracts, as it seemed to have been the case, could expose the bureau to huge losses as a result of litigation. Kebs’ own lawyers, Iseme Kamau and Maema Advocates, had advised that it be stopped for fear of exposing the standards’ agency to huge costs.

Meanwhile, the Public Investments Committee (PIC) of the National Assembly’s advice that Kebs should withhold awarding of the contracts for the expanded tender to EAA Company Limited and Auto-Terminal Japan (ATJ) until a special audit of the two firms the committee, was considering is over was ignored.

Amid all these have been several allegations of corruption in the expansion of the tender to the ATJ and EAA. The brief arrest on Thursday of Kebs managing director Lt Col (rtd) Bernard Njiraini over allegations of obstructing investigations by the Ethics and Anti-Corruption Commission (EACC) now threatens to expose the decisions and alleged under-the-table deals that went on in the award of the tender to ATJ and EAA.

Mr Njiraini was arrested on Thursday by EACC on accusation of frustrating investigations by failing or refusing to comply with orders to supply the agency with original documents related to the awards for tenders for the provision of pre-export conformity of goods, used motor vehicles, mobile equipment and spare parts, the commission said in a statement.

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He has not been charged and EACC sources said he was released conditionally on the undertaking that he will henceforth comply with the commission’s requests.

A glimpse into the allegations of corruption in the award of the PVOC tender for used motor vehicles, mobile equipment, and spare parts are contained in a letter the Public Procurement Regulatory Authority (PPRA) wrote to KEBS on April 21, 2020, about a month after the contracts were awarded, as part of the investigation the Authority was undertaking. The letter, which has been presented as an investigation report, arose out of two complaints from an unnamed whistleblower and Niavana Agencies Ltd, who had unsuccessfully challenged the decision to award the expanded contracts before the Public Procurement Administrative Review Board (PPARB).

However, EAA moved to court to stop PPRA from proceeding with the investigations on grounds that the same issues had been raised before the Public Procurement Administrative Review Board and were also still the subject of High Court Judicial Review Application No. 66 of 2020. Justice Pauline Nyamweya granted the stay order sought by EAA on April 30.

In the contested preliminary investigation, a copy of which Sunday Nation has obtained, PPRA had noted several irregularities that Kebs was to respond to within seven days.

For instance, as per the criteria set out by Kebs, all the three firms that submitted their bids were not responsive at the preliminary evaluation stage. Three firms had submitted bids, namely ATJ, EAA, and Nippon Inspection Centre Ltd. For example, ATJ, which was one of the two firms eventually awarded the contract, was found to have failed to meet the requirement to provide a copy of the certificate of incorporation. For its United Kingdom unit, the certificate of incorporation it provided showed that it deals in motor vehicle repairs, which amounted to a conflict of interest given the nature of works KEBS was seeking.

EAA, on the other hand, among others, failed in the requirement for copies of relevant government licenses, some of which were found to have failed to conform to the requirements.

While Nippon Inspection Centre Ltd was dropped at the preliminary stage, EAA, and ATJ advanced to the technical evaluation stage despite the noted irregularities.

At the technical evaluation, PPRA found that EAA and ATJ had again been unresponsive after failing to provide all the information regarding their presence and location to provide the required services in the UK, Japan, UAE, Thailand, South Africa, and Singapore. In some instances, they failed to provide lease or tenancy agreements and in at least one case, the lease agreement provided was unsigned.

At the financial evaluation stage, PPRA noted that contrary to the requirement that the form for tender be completed, signed and stamped, both companies’ forms were not stamped.

The Authority had also observed that the procurement plan which KEBS relied on to procure the services was prepared on January 2, 2020, a whole month after the invitation to tender. According to PPRA, this was contrary to Section 69(2) which provides that a procurement plan cannot be used retrospectively.

Moreover, PPRA noted the plan used by KEBS had not been approved by the National Standards Council. “The procurement plan did not have an estimated value and an indication of the budget available and the sources of funding and the choice of procurement method for the enlargement of the provision of pre-export verification Pre-Export Verification of Conformity (PVoC) to standards for used motor vehicles, mobile equipment and spare parts, as provided for in Section 53(10) of the Act as required by Regulations 21(1f&g) of PPDR 2006,” PPRA stated in the letter.

Other irregularities noted were that KEBS did not include indicative or approved budgets for the tender and that the process was done without a purchase requisition as required by law.

“Taking cognisance of the above findings and observations, it is in the opinion of the authority that the subject procurement did not meet the requirements set forth in the tender document, Public Procurement and Asset Disposal Act, 2015, and the Regulations issued under the repealed Public Procurement and Disposal Act 2005 pursuant to section 24 of the Interpretation and General Provisions Act,” PPRA stated in the letter.

Kebs told Sunday Nation that they had responded to the letter and explained to the Authority the issues it had raised. The bureau, however, said they could not share the response as it would not be in line with government procedures.

The tender is also subject to at least two other court matters by Niavana Agencies and activist Okiya Omtatah.

For pre-export inspection services, both EAA and ATJ charge $155 (Sh16,500) for every vehicle coming from Japan, $225 (Sh24,000) for the UK and South Africa, $192 (Sh20,400) for UAE, and $250 (Sh26,600) for Thailand and Singapore. Of the amounts, KEBS gets $45 (Sh4,795) per vehicle as administration fees paid monthly.

According to a report by PIC, 91,179 motor vehicles were imported to Kenya in 2019, up from 87,739 brought into the country in 2018. QISJ had been the sole inspection agency for KEBS between those years before the field was expanded to include EAA and ATJ.

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