Big win for French firm in IEBC contracts case

The High Court on Wednesday quashed a recommendation by the National Assembly to bar French multinational Idemia —formerly OT-Morpho — from doing business in Kenya for 10 years.

The ruling is a huge relief to the Independent Electoral and Boundaries Commission (IEBC) which had contracted the firm to run its key elections management system. The five-year contract ends next year.

Justice John Mativo ruled that the National Assembly Public Accounts Committee (PAC) had contravened the law by applying it retrospectively against the French firm that managed the country’s elections management system in the disputed 2017 presidential election.

“By recommending the cancellation of contracts, the National Assembly and PAC fell into error and exercised jurisdiction it did not possess. To that extent, the National Assembly and PAC abrogated to themselves judicial functions which the law has not vested into it, hence, exercising in excess of their jurisdiction,” Justice Mativo said in a judicial review ruling.

DE-REGISTRATION

The court also declared null and void the requirement by the National Assembly for de-registration of the firm on the basis of the company not having been registered in Kenya when it won the contract, saying it was applying the law retrospectively.

It similarly quashed the recommendation by the House for investigation, and if found guilty, cancellation of all contracts between the IEBC and Idemia, with the court saying the law the House wanted to apply was , like the first order, retrospective.

“The PAC report only to the extent it directs Independent Electoral and Boundaries Commission to take immediate action to recover all monies paid under the contracts between M/s Idemia and the IEBC is ultra vires since it amounted to unlawful cancellation of contracts which is a function vested in courts of competent jurisdiction but not a legislative function,” the court said.

THE TENDERS

OT-Morpho, as Idemia was then known, first won the Sh4 billion IEBC tender to supply 45,000 Kenya Integrated Election Management System (Kiems) kits used in the 2017 General Election.

It further got another Sh2.5 billion contract to supply kits used in the October 26, 2017 repeat presidential election.

Kiems—which contains the biometric voter registration, candidate registration, voter identification and the all-important results transmission system—was created as the panacea to the problems that Kenya faced in its elections management.

It fell short on this promise, with the kits spectacularly failing in the results transmission—a key plank in the Supreme Court decision nullifying the presidential election results of August 2017 in a petition lodged by Opposition leader Raila Odinga.

According to the 2017 contract between the IEBC and the company, the French multinational was to supply, install, configure, test and commission the Kiems, supply the requisite licences and royalties, and train the commission’s staff on the use of this technology as well as provide technical support.

PAC'S FINDINGS

In its findings, PAC, chaired by Ugunja MP Opiyo Wandayi, found the French firm to have acted in breach of law for not being registered locally as a foreign company.

The MPs, in their April 2019 report, wanted the French firm investigated over section 974 (3) of the Companies Act, which provides that a foreign company shall not do business in the country before it is registered as a foreign firm by the Registrar of Companies and that the local shareholding must be at least 30 percent.

Company law further provides that a foreign firm should have at least one representative in the country.

MPs amended the PAC report on the audited accounts of the IEBC to have the technology firm held accountable for payments it received for contracts related to the 2017 polls.

In all, PAC found that more than 90 per cent of the procurement of critical goods and services by the IEBC during the period under review was done in a manner that contravenes the Constitution and the procurement law.

THORNY ISSUE

The matter of the French company has been a thorn in the flesh of the IEBC for long, even leading to part of the reasons that divided chairman Wafula Chebukati and former chief executive Ezra Chiloba.

In a letter terminating Mr Chiloba’s employment, Mr Chebukati wrote that “the acquisition of goods and services from M/S Safran Identity and Security was done at unjustifiably high price contrary to Section 68 (1) (a) and (b) of the Public Finance act (2012). As a result, it cannot be confirmed whether value for money was realised in the acquisition of goods and services from MS Safran.” Safran was the name of the company before it changed to OT-Morpho.

In their case, OT-Morpho argued that the law does not confer the National Assembly any such authority to bar the company from Kenya, saying when it registered to work in Kenya, there was no requirement to be registered in Kenya.

While the company said that it appeared before the House committee, it argued that it was not given adequate notice of the nature and reasons of the proposed adverse action—the recommendation that they be barred from doing business in Kenya for 10 years or that its contracts with IEBC are cancelled—and neither was it accorded an opportunity to be heard.

In his rebuttals, National Assembly Clerk Michael Sialai said that the House committee enjoys powers and privileges bestowed on Parliament including to summon witnesses, receive evidence and to request for and receive papers and documents from the government and the public.

Further, he argued, these powers were equal to those of the High Court to compel attendance of witnesses or to issue a commission or request to examine witnesses, locally or abroad.