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Detectives dig up dirt in Sh95bn pipeline of scams

Tuesday June 5 2018

JOHN KAMAU
By JOHN KAMAU
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Details of the most shocking theft of public resources in recent Kenyan history emerged on Monday as the Directorate of Criminal Investigations dug up more sleaze at Kenya Pipeline Corporation (KPC), where more than Sh95 billion worth of contracts are being examined in a wide-ranging graft investigation.

The procurement-driven stealing at KPC is ten times bigger than the current National Youth Service scandal in which insiders, conniving with merchants, paid for non-existent deliveries or fiddled with figures.

On the radar of detectives at KPC are 27 projects carried out in the last four years, most of which are riddled with procurement irregularities and corrupt deals. This skulduggery, by all standards, could turn out to be the biggest scandal in Kenya’s parastatal history.

It dwarfs the Anglo Leasing scandal of 2002 in which the government signed 18 contracts with several local and foreign companies for the delivery of equipment and services for Sh77 billion. Mr Deepak Kamani, the businessman linked to the scandal, has an ongoing case in court.

SH647 MILLION TENDER

The KPC investigation has sent shivers at the headquarters after officers from the Ethics and Anti-Corruption Commission (EACC) raided the home of former managing director Charles Tanui in connection with a controversial Sh647 million tender award in 2015 to a then Gill House-based company to supply hydrant pit valves, which are specialised aircraft fuelling equipment. The valves were delivered on July 14, 2015, but were not formally received at the company stores because at the time the supplier was under investigations by the EACC.

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The valves were delivered to KPC within three months after the tender was issued. Investigators reckon that the delivery period was a record time, given that it takes up to six months for the order to be manufactured and materials to get shipped.

The firm delivered the valves with no documentation showing a pre-shipment order or bill of lading, which shows the purchase trail from acquisition overseas to delivery at KPC.

While the EACC Chief Executive Officer Halakhe Waqo has already confirmed that the commission is conducting investigations into the award of tender No SU/QT/3264F/14 for the fuelling equipment, the move by the DCI to investigate contracts awarded over the last four years is an indicator of the level of scrutiny that Mr George Kinoti, the director-general, wants at the corruption-riddled corporation.

STAY CALM

Last week the KPC managing director, Mr Joe Sang, sent an internal memo to all staff asking them to “stay calm and give a chance to EACC and other investigating arms of the government…until the matter reaches a logical conclusion”.

For the past one week, detectives have been speaking to various people and are compiling a comprehensive dossier on a parastatal known for years for its kickback-driven projects, but which, for some reason, has appeared untouchable to successive governments.

Of particular interest to Kenyans in this scandal is the construction of an Sh80 billion pipeline to replace the old line from Mombasa to Nairobi, built in 1973. Initially, the idea was to replace the old 14-inch pipeline with a 16-inch conduit at an estimated cost of Sh16 billion, yet even before workers and earthmovers moved to site, KPC had used more than 15 billion to modernise infrastructure.

Soon after, the management decided to tender for a new 20-inch line. “We are investigating whether KPC indeed lost Sh35 billion for a project which they had not budgeted for, why they had to go for expensive loans that will see the parastatal pay Sh10 billion in interest repayments,” a source familiar with the investigations told Nation.

The pipeline project was awarded to an Israeli firm, Zakhem, and has been delayed now by more than 43 months.

READ MISCHIEF

Whistleblowers have described various KPC projects as kickback-driven, prompting the investigations by DCI.

The National Assembly Public Investments Committee has read mischief into the purchase of airplane fuelling kits by KPC from Aero Dispenser Valves Ltd that was done in 2015. The team said there seems to have been a collusion between the KPC and Aero Dispenser Valves Ltd in the Sh640 million deal.

Consequently, the committee has ordered the current KPC management to trace all those who sat in the tender team in 2015 to answer some questions over the deal.

“We would like to know who was sitting in that tender committee at that particular moment and the owners of Aero Dispenser Valves Ltd,” said the committee chairman and Mvita MP Abdulswamad Nassir.

According to documents presented to the committee, KPC opted for direct procurement of the items from Cla-Val because the company is the original equipment manufacturer of Cla-Val pit valves and at that particular time, there was no other known manufacturer.

Mr Sang told MPs the tender documents for the valves were sent to Cla-Val through its Canadian agent in charge of the African region Allied Inspection and Testing.

Additional reporting by Samwel Owino