CBK boss faces arrest over Sh1.2bn tender - Daily Nation

CBK boss faces arrest over Sh1.2bn tender

Monday February 10 2014

PHOTO/FILE  DPP Keriako Tobiko.

PHOTO/FILE DPP Keriako Tobiko.  

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The Director of Public Prosecutions has ordered the arrest and prosecution of Central Bank Governor Njuguna Ndung’u over alleged abuse of office.

Mr Keriako Tobiko gave the consent for the governor’s prosecution in a letter to the Ethics and Anti-Corruption Commission seen by the Daily Nation.

And in a telephone interview, he said: “I have looked at the file and returned it to the EACC with the directive to charge.”

The charges arise from the award of a Sh1.2 billion tender for the installation of security software at the Central Bank.

Mr Tobiko’s letter is in response to last month’s recommendation by the anti-corruption commission that Prof Ndung’u and other senior CBK officials be charged with abuse of office for failure to comply with public procurement regulations which it says led to the loss of more than Sh400 million in public funds.

Though he does not sit in the CBK’s tender committee, Prof Ndung’u has found himself at the centre of the procurement controversy because of the protracted battles he fought with the tender committee before the job was awarded to Horsebridge Networks Systems East Africa Limited.

Prof Ndung’u did not respond to questions on the matter. Neither could he be reached on the telephone,


The governor has, however, in the past defended himself against the alleged procurement irregularities, saying that the culprits will soon be known.

Mr Tobiko on Monday declined to confirm or deny plans to charge the governor but acknowledged that he had responded to the anti-corruption commission on the matter.

At the centre of Prof Ndung’u’s troubles is his alleged rejection of advice by internal and external legal teams to appeal a decision by the Public Procurement and Administrative Review Board’s to award Horsebridge Networks the contract.

Horsebridge, an international IT company with a local presence, was among the six firms which participated in the tender. Horsebridge moved to the appeals board asking it to reverse the CBK tender committee’s decision to reject all the bids.

Investigations revealed that Horsebridge filed its appeal before the tender committee announced its decision, raising questions as to how it knew the outcome.

The tender committee, chaired by deputy Governor Harun Sirma had nullified the CBK technical evaluation team’s decision to award the tender to Horsebridge after it detected errors in the tender documents.

This triggered a series of events that saw the matter end up at the Public Procurement Oversight Authority and ultimately with the anti-corruption team.

Horsebridge had petitioned the Public Procurement and Administrative Review Board, saying it had won the tender as the lowest bidder. But correspondence seen by the Nation said the documents had errors, which the tender committee felt could have compromised the outcome.


“The technical capability to install and maintain the ISMS as quoted was poorly crafted and was not used well by the evaluation team. Evaluation criteria revealed inconsistencies among the individual scores,” state the minutes of the committee.

Horsebridge petitioned the Public Procurement Board, who “awarded” them the tender and dismissed the CBK and the tender committee as a “wild horse who should be calmed”.

“The board holds that the procuring entity and specifically the tender committee is behaving like an unruly horse and it has to be tamed and calmed. The board orders that this tender be and is hereby awarded to the lowest bidder Horsebridge Networks Systems,” stated Mr Mwaniki Gachora in the board’s communication.

Prof Ndung’u agreed with the board’s decision although the CBK lawyer, Mr Fred Ngatia, had advised him to challenge the board’s decision at the High Court.

Five other companies were evaluated for the contract: Orad Limited, Azicon Kenya Limited, Engineered Systems Solutions Limited, Indra Limited and Aua Industria.

Prof Ndung’u sought Mr Ngatia’s advice on February 26, last year, after the matter reached the appeals board.

“We are unable to recommend that you proceed to award the tender given the litany of misdeeds which are fully documented regarding the tendering process. Indeed the situation dictates that the tender be advertised afresh and perhaps new guideline considered,” the lawyer said in his letter to the governor.

He told Prof Ndung’u that allowing the decision to pass would set a bad precedent.


Despite the letter, CBK awarded the tender to Horsebridge through a letter dated February 24, 2013. This was after the 14-day window to appeal the board’s decision had closed. Since then, however, Horsebridge has not signed a contract.

In its communication to the DPP recommending that criminal charges be preferred against Prof Ndung’u and senior CBK officials, the anti-corruption commission said its investigations had established that the governor had authorised the award of the tender contrary to the law and at a price that was Sh400 million above budget.