Top officials ‘stole HIV projects cash’

A leaked World Bank internal report has revealed how billions of shillings were embezzled.

From manipulating contracts and tenders, demanding bribes, circumventing procurement regulations, to demanding kickbacks upfront to process their funds, senior government officials, parliamentarians and crooked NGOs misappropriated money in four key World Bank funded projects during President Kibaki’s era.

The confidential Kenya Detailed Implementation Review report, leaked by whistleblower website Wikileaks, now confirms the massive corruption in the bank’s own projects, and mismanagement of some project funds by some officials and NGOs, despite a spirited denial by the bank’s Kenyan unit that there was no loss of funds.

The report by World Bank’s internal anti-corruption unit, the Department of Institutional Integrity (INT), reviewed four of the bank’s projects in Kenya involving Sh37.64 billion in bank financing and found that they had “numerous indicators of serious irregularities”, as well as “actual occurrences of fraud and corruption consistent with findings of previous forensic audits and examinations.”

The four projects: Free Primary Education Support Project, Kenya HIV-Aids Disaster Response Project (Khardep), the Northern Corridor Transport Improvement Project (NCTIP) and Kenya Decentralized Reproductive Health and HIV/Aids Project (Dare) funded through the Ministry of Health.

“The review found that a meaningful number of contracts under three of the four projects-Khardep, Dare and NCTIP-contained numerous indicators of serious irregularities. More importantly, INT found actual occurrences of fraud and corruption,” the review said.

The report shows that World Bank’s own internal self-assessment of Kenyan funded projects, only had 25 per cent of its Kenya projects rated “satisfactory” for overall bank performance, an indictment on its own funding and project monitoring mechanism.

Last month, another report showed that the political elite looted more than Sh320 billion of the bank’s funds on Kenyan projects between 1990 and 2000, an assertion the bank vehemently denied, terming the opinion of the report’s authors as “personal”.

The Sh5.27 billion Dare project, the World Bank review said, had evidence of widespread corruption perpetrated by Ministry of Health officials resulting in the loss of Sh548.28 million, after the investigators reviewed project contracts worth Sh759.16 million.

The project, whose main aim was to improve maternal and child health through increased delivery of integrated child survival, reproductive health and HIV/Aids services, only saw Sh3.09 billion disbursed.

“Credible witnesses informed [INT] that Ministry of Health officials at all levels were engaged in corruption in virtually every component of the project,” the review states “..the team found evidence that the Ministry of Health officials circumvented the limited oversight of the procurement agent through supplying pre bid information to potential bidders and soliciting kickbacks from the winners; and soliciting further kickbacks through the implementation process.”

In this project, the bidders complied with the corrupt demands of these MoH honchos by inflating bid prices and paying bribes.

“INT also found evidence that bidders engaged in fraudulent misrepresentation and collusive practices.

“Credible witnesses confirmed that under public procurement, MoH high level officials steered contracts to specific bidders in exchange for kickbacks,” the report says.

In Khadrep, INT uncovered irregularities in 29 of the 36 contracts it reviewed. The project was being undertaken by the National Aids and Control Council, which the World Bank’s anti-corruption unit indicted. This project recorded a loss of Sh59.25 million.

The Sh5.97 billion KHARDEP programme was meant to increase HIV/Aids prevention, with the funds disbursed through forms of grants to local organizations. These grants were awarded by the governments Project Implementation Unit (PIU), NACC and the Constituency Aids Control Council, where some legislators were fingered for siphoning part of the funds.

“INT found a number of strong indicators within the projects contracting for internal procurement and granting activities were consistent with potential fraud, corruption and collusion. A review of NACC internal procurement found indicators of collusive practices, biased bid evaluation and fraud,” the review said.

For instance, grant recipients reported that the continuous requests for bribes made by the government officials diverted funds from the activities' objectives.

“One grant recipient explained that, instead of paying secondary school fees for orphans, it used grant money to pay bribes. They also stated that this caused orphans to drop out of school and engage in illegal activities, including prostitution, which would inevitably increase the exposure and risk of the HIV/AIDS infection,” the review found out, potentially negating the objective of the project.

The wanton corruption revolving around the banks projects in Kenya saw the then World Bank President Paul Wolfowitz, in 2006 withholding some Sh27.41 billion in lending to Kenya and sought to link future lending to guarantees of press freedom.

Under the banks President Robert Zoellick, saw the largest of the corrupted Kenyan projects identified by INT, a Sh21.82 billion road-building scheme-the Northern Corridor Transport Improvement Project, continued to disburse funds through the end of 2009, despite leakage and looting of the same. The project saw Sh22.7 billion of its funding compromised because of the massive irregularities.

At its signing, the project was supposed to assist in the rehabilitation of the Mombasa-Nairobi-Malaba highway; support for the Kenya Civil Aviation Authority (KCAA), the Kenya Airports Authority and the Ministry of Transport.

“Massive indicators of collusion were identified under this project with actual findings of fraud by two companies that submitted protective bids by inflating unit prices to permit other companies to win contracts,” the review says.

The Sh5.78 billion Free Primary Education Support Project was the only programme funded by the World Bank that had less irregularities, but still had Ministry of Education (MoE) officials fingered for ‘conflict of interest and procurement irregularities.” The project had Sh27.09 million of this project as potential loss. The project was set to fund textbook procurement for over 18, 100 schools in the country.

“INT observed discrepancies in the disbursement of funds by MoE to the schools, which indicates possible irregularities at the ministry level,” the report says.

However. World Bank anti-corruption investigators lauded this project for its measures to tighten and control systems, which sealed loopholes for potential fraud.

“A satisfactory level of accountability from the local communities to MoE contributed to the proper use of funds under this programme. Th e project, overall, appeared to be reasonably safeguarded and supervised,” the review said.