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EACC arrests 6 in Sh100m audit vault software probe

Friday October 18 2019

Integrity Centre in Nairobi, the headquarters

Integrity Centre in Nairobi, the headquarters of the Ethics and Anti-Corruption Commission. PHOTO | FILE | NATION MEDIA GROUP. 

JILL NAMATSI
By JILL NAMATSI
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The Ethics and Anti-Corruption Commission (EACC) has arrested six people over the fraudulent purchase of audit vault software by the office of the Auditor-General at a cost of Sh100 million.

In a statement on Friday, the commission said it had been investigating claims of corruption in that office as the estimated cost of the software was Sh18 million yet Sh100,675,680.80 was spent.

The software was purchased from Open Systems Integration (OSI) Kenya "through direct procurement, purporting to be the only accredited partner of Oracle".

"EXAGGERATED"

The EACC reported that single sourcing was unjustified in the procurement and that "the payment was grossly exaggerated".

It further said that only Sh36 million was lawfully paid to Oracle.

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"The balance of Sh64 million was paid as kickbacks to public officials, private persons and their associated companies," the commission said.

The EACC said Director of Public Prosecution reviewed the file on the matter and approved charges against 24 individuals and organisations.

They will face charges related to conspiracy to commit economic an crime, conflict of interest, unlawful acquisition of public property, dealing with suspect property and money laundering.

THOSE ARRESTED

The commission said that so far, it has arrested six suspects who will be taken to court on an unspecified date.

They include former Deputy Auditor-General Stephen Ndung'u Kinuthia; Justus Ongera, the ICT director in the Office of the Auditor-General; and IT manager Annette Mwangi.

The others are Desmond Irungu Kinuthia and Nelson Karanja Kinuthia, both directors of Enkei Holdings Limited and Charles Mbugua Njuguna of Njuguna and Partners.

SUMMONSES

The EACC directed the following to present themselves at Integrity Centre for questioning:

  1. Charles Githinji Gichobi - Sales Executive, Oracle Systems Kenya Limited

  2. Ephantus Kairu Kahwae -Non-Executive Director, Open Systems Integration Kenya

  3. Sylvester Kiptoo Kiplagat - Non-Executive Director, Open Systems Integration Kenya

  4. Patrick Shem Kamau Maina - Managing Director, Open Systems Integration Kenya

  5. Charmine Kinuthia, Director, Enkei Holdings Limited

  6. Charles Mwaduna - Director, Mars Technology Limited

  7. Edward Mulewa Mwachinga - Director, Mars Technology Limited

  8. Jane Wangui Kinuthia - Director, Nanazi Investment Limited

  9. Florence Waithira Kinuthia - Director, Nanazi Investment Limited

  10. James Gachoka - Partner, Amolo Gachoka and Company Advocates

THE SYSTEM

The audit vault is a centralised data base that securely stores audit information.

The Auditor-General installed it in 2014, saying it would help track irregular transactions in public institutions.

In January 2017, Auditor-General Edward Ouko said the procurement was done transparently but the EACC recommended charges against him and Mr Kinuthia, saying the procurement was irregular and in exchange for kickbacks.

In his defence, Mr Ouko said Sh74 million was spent on the Oracle licence, Sh15 million on Oracle's annual support costs, Sh6.5 million on the first instalment of the system’s implementation fees and Sh3.5 million on Value Added Tax.