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Detectives probe KPA official over Sh6bn tenders

Sunday September 8 2019

Kenya Ports Authority

Kenya Ports Authority managing director Daniel Manduku. The agency has been accused of financial improprieties. PHOTO | FILE | NATION MEDIA GROUP 

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The Directorate of Criminal Investigations (DCI) is investigating the possible loss of Sh6 billion at the Kenya Ports Authority over the past one year, the Sunday Nation has learned.

The amount in question is inclusive of some Sh2.5 billion that investigators believe might have been lost in the ongoing rehabilitation of the Kisumu Port.

On August 22, Transport and Infrastructure Cabinet Secretary James Macharia wrote to Director of Criminal Investigations (DCI) George Kinoti asking him to commence investigations in to the allegations of fraud at the parastatal.


However, a week later, on August 29, Mr Kinoti wrote back to the CS complaining that the investigations were being frustrated by top port officials. Mr Kinoti urged the CS to take administrative measures that will see top KPA officials kicked out of office since they are suspected of hoarding documents and intimidating potential witnesses.

In particular, Mr Kinoti singled out KPA managing director Daniel Manduku, who was appointed to the position barely eight months ago, for interfering with exhibits and witnesses.


“The allegations disclose wide-ranging fraud and theft running into colossal amounts,” said Mr Kinoti in his letter to CS Macharia. This means that the CS will now have to instruct the board of KPA, whose chairman is the former Chief of Kenya Defence Forces Gen (Rtd) Joseph Kibwana, to take action against Dr Manduku and other top managers.

Besides Dr Manduku, investigators have also demanded that six other top managers at the institution be forced to step aside because other than being prime suspects, they occupy offices in which critical evidential material are domiciled. Mr Macharia had not replied to our request for comment by the time of going to press.

On Saturday, Dr Manduku replied to our queries with a curt statement he sent via WhatsApp: “The matter is under investigation.” When asked about the allegations of witness interference, he retorted: “No comment. Publish the story on page 1. Front page.”

Dr Manduku, an accomplished architect, was tapped to head KPA in May in acting capacity following the sacking of Ms Catherine Mturi-Wairi over inefficiencies at the port. Until then, Dr Manduku was the CEO of the National Construction Authority (NCA). He was confirmed to the post in November amidst protests by the local community that one of their own should have replaced Ms Mturi-Wairi.


According to an e-mail sent out on Thursday evening by his personal assistant, the embattled MD is set to address senior staff Monday morning.

“The Managing Director has scheduled a meeting with all Heads of Divisions and Heads of Department on Monday September 9, at 7:30 am at the New Conference room,” read the email from his PA Maureen Kimani. Various well-placed sources told the Sunday Nation that, at the heart of Dr Manduku’s tribulations, is the rehabilitation of the Kisumu Port which began in May at a projected cost of Sh3 billion. The port project is expected to increase maritime business and travels between the East African Community member countries as well as uplift the stature of Kisumu City.

That President Uhuru Kenyatta has taken the port rehabilitation project to heart is evidenced by the three inspection tours he has made so far, and which our sources said opened his eyes to possible graft that could taking place in the project.

Sources who accompanied the Head of State during his last impromptu visit to the project on July 6, while on his way back from a private visit to Tanzanian President John Magufuli, said President Kenyatta took issue with the slow pace and ordered the engineers on site to ensure the work is finished by August.

Journalists were locked out of the tour in which the President held a 30-minute closed-door meeting with engineers from Kenya Navy and officials from the KPA and Kenya Railways Corporation.

Our sources said an irate President openly berated Dr Manduku for the slow pace of works and what he saw as needlessly high cost of some of the rehabilitation works being undertaken at the port facility.


“He was surprised when he heard that KPA had budgeted Sh2.5 billion for concrete works yet the contractors told him they were to be paid Sh600 million for the whole project,” said a source who was in the private meeting.

According to our source, the President then directed the NYS, Kenya Navy and the Kenya Prisons to take control of the project. “The revised budget by NYS for the concrete works came to Sh120 million,” said our source.  Our sources said President Kenyatta alluded to the loss of funds in the Kisumu Port project in his speech when he flagged off last week Kenya’s maiden consignment of crude oil.

“I want to tell you that even those of you here at the port, we are monitoring and watching. We know the money you wanted to spend there and the amount we have spent, as well as the amount you intended to spend,” he said.

Sources said inflating bills of quantities for concrete and electrical works is one of the biggest corruption conduits at KPA. One of the KPA general managers has thrice brought up the issue in the executive committee meetings but has been dismissed offhand, our source disclosed.

Also under investigation are concrete works running into over Sh1 billion at a yard in Nairobi’s Makongeni area. KPA wanted to lease the yard from Kenya Railways for expansion but KPA proceeded to spend colossal money on it even before the lease could be agreed upon.


On Thursday, Kenya Railways acting Managing Director Philip Mainga, while recording statements with the investigators, denied ever leasing the yard to KPA.

“Kenya Railways has told us there was a discussion to lease the property to KPA but that process hasn’t taken place yet. So it would appear KPA managers were just looking for ways of spending money. It’s a scandal of monumental proportions,” said a source in the investigations team.

 In his fiery speech in Mombasa last week, the President took a swipe at top port officials for frustrating his signature project, the Standard Gauge Railway, by starving it of cargo business. Highly placed sources said KPA officers were slowing down the clearance of cargo in order to create an artificial congestion so that containers being offloaded from ships can be diverted to Container Freight Stations in Mombasa, which are owned by a few wealthy individuals.

“We know what you are planning — slow down things so that the cargo goes elsewhere,” the President said. KRA has been complaining of dipping revenues at the port in recent times and on Friday Acting Finance CS Ukur Yattani and KRA Commissioner General Githii Mburu addressed the KPA management over the issue.

Investigators will also be seeking to understand why KPA, which is one of the most profitable parastatals in the country, overran its budget by Sh2.3 billion in the 2018/2019 financial year, without the approval of the board.

An attempt by the MD to have the board validate the expenditure forced two board members to report to the DCI claims of impropriety in the organisation. The company has so far overran its first-quarter budget by Sh800 million, according to our sources.


Dr Manduku’s tribulations were compounded by a whistleblower within KPA who wrote to investigative authorities about alleged plunder at the institution, ostensibly at the behest of the MD.

On July 16, Mr Joseph Patterson Okakho, who was the former acting head of ethics and integrity at KPA, wrote to Mr Kinoti detailing his tribulations at the hands of Dr Manduku after he queried the integrity of a number of contracts awarded by the company.

“Briefly, problems started in May 2018 after Dr Manduku took over as acting Managing Director at the Kenya Ports Authority,” said Mr Okakho in his 18-page statement.

The whistleblower said that, soon after the MD was appointed, former Transport Principal Secretary Prof Paul Maringa instructed him to quickly bring Dr Manduku up to speed on the importance of corruption prevention at KPA.

“My encounter with the acting CEO was very brief – less than two minutes. I had organised a briefing of 20 minutes, but he only gave me less than two and showed little interest in anticorruption,” he said.

Mr Okhako said his work led to his falling-out with his boss who punished him for allegedly leaking company secrets by first demoting him and transferring him to the Kisumu Inland Container Depot as principal officer.


He said he detected a breach of policies and regulations as early as the July-to-November 2018 period. For example, he said he opposed in October 2018 a training programme on procurement suggested by private consultants and which the MD had approved.

“This would have cost between Sh12 million and Sh14 million in travel expenses, accommodation and tuition fees for over 64 members of staff, “said Mr Okako.

He added that the training had not been budgeted for by KPA and was not captured in the KRA training needs analysis. “After a few days, the firm wrote an email…cancelling the training in Kisumu.”

He said he did not have peace as the head of ethics and integrity since then and was allegedly accused of sharing information with the DCI and the anti-corruption agency.

“These accusations…started immediately after I intervened and stopped that particular training expenditure,” he said, claiming that the “MD became very “uncomfortable with me”.

He said he had various meetings with board chairman Gen (Rtd) Kibwana to register his concerns over the CEO’s disinterest in corruption prevention. “However, I did not get any help from the chairman of the Board despite many questions I raised with him,” he said.

In total, he raised queries on 12 projects that KPA was undertaking but which he thought had not followed the law. Mostly, he was not given answers and this set him on a collision course with his boss.


 For example, one of the project he raised issues with is the manufacturing of 10,000 block barriers at a cost of more than Sh650 million. The tender was awarded to seven companies, and each was supposed to supply 1,380 barriers each at a cost of Sh94 million.

“The question is why so many barriers? What are they for? Where are we going to use all these barriers? If we wanted all those barriers, why did we split the tender?” Mr Okakho posed in his statement to the police.

In a letter to DCI Kinoti dated August 19, Mr Okakho said the MD had personally threatened him with dismissal if he continued giving information to investigative agencies.

“On August 12, I got a WhatsApp call from the MD himself. The call was short and threatening and I quote, “…..what is this report I hear you filed with DCI and EACC?”

Mr Okakho claimed the MD added: “…..I don’t want to hear about reports being made outside KPA…, you stop what you are doing or I will have you sacked.”

Two days later, Mr Okakho was called to appear before a disciplinary committee over his alleged misuse of social media platforms.

Mr Okakho declined to attend the disciplinary hearing and instead appealed to the DCI for protection, which prompted Mr Kinoti to write to CS Macharia to take administrative action against Dr Manduku and other senior officials.