EACC arrests 7 Kenya Pipeline managers over Sh660m loss

Seven senior managers of Kenya Pipeline Company (KPC) have been arrested in a second wave of arrests targeting current and former managers of the company.

Ethics and Anti-Corruption Commission (EACC) detectives arrested the seven over the loss of public funds totalling more than Sh660 million in the October 2014 procurement of 58 hydrant pit valves to replace the faulty ones at the Jomo Kenyatta International Airport (JKIA).

EACC is also looking for nine more suspects including former KPC managing director Charles Tanui, two directors of Aero Dispenser Valve Ltd, while Kenyan authorities have approached their Canadian counterparts to investigate and prosecute the managers of Allied Inspection and Testing Inc led by the proprietor Jim Yukes.

IN CUSTODY

Those in custody are the finance general manager Samuel Odoyo and procurement manager Nicholas Gitobu, both of whom had earlier been charged alongside outgoing managing director Joe Sang for graft arising from the Sh1.9 billion Kisumu Oil Jetty.

Others in custody are business development officer Peter Gaitho Machua, administration manager Jane Jesanai Nakodony, a senior electrical engineer Charles Nderitu Maitai, a procurement officer Fredrick Kagosh Ogenga and a director of Aero Dispenser Valve Ltd Francis Omondi Obure.

The seven were to take pleas on Tuesday.

EACC was also seeking for eight others including Mr Tanui, operations manager Philip Kimelu, chief manager electrical Bramwell Wanyalika, ICT manager Francis Muraya, mechanical engineer Charles Ochieng’ Ouko, an accountant Emilio Mwai Nderitu, two directors of the Kenyan front John Huba Waka and his wife Beryl Aluoch Khasina, and the Canadian Yukes.

HYDRANT PIT VALVES

In October 2014, KPC went shopping for 58 hydrant pit valves to replace the faulty ones at the JKIA.

At the time, the KPC board had passed a resolution that given the urgency of the matter, the company would go for direct single sourcing from the US manufacturer Cla-Val Company Limited of Costa Mesa, USA.

The project cost was set at Sh59 million and Sh22 million in taxes and the secretariat was tasked with establishing communication with the US manufacturer.

But along the way, KPC never contacted Cla-Val.

Instead, KPC approached a Canadian company, Ms Allied Inspection and Testing Inc which was charging Sh660 million for the contract, which is 814 percent of the cost that had been approved by the board.

By the time the EACC noticed suspicious activities and stopped further payments, KPC had already paid, upfront, Sh254 million ($2.5 million).

Allied Inspection and Testing then approached Cla-Val seeking to purchase the valves on behalf of KPC.

BRIEFCASE COMPANY

The Canadian company used a Nairobi-based company, M/S Aero Dispenser Valve Limited, “a briefcase company having its offices at Utalii House, Nairobi” as its front in supplying the valves at those inflated costs.

According to the investigators, the involvement of the Canadian company and its Kenyan front went contrary to the tender committee’s resolution which had recommended M/s Cla-Val Co. Ltd “being the Original Equipment Manufacturers for the items tendered.”

“It also defeats the justification for direct procurement which was that the equipment be procured from the Original Equipment Manufacturer.”

Questions have also been raised how the Canadian company came to the picture yet only Cla-Val was to be contacted.

CHANGED SUPPLIER

The KPC managers changed the supplier without going back to the tender committee or the board to vary the resolution.

KPC’s claims to have attempted to contact Cla-Val are also being questioned as they were never received in the USA as it was addressed to [email protected] and [email protected], both of which are addresses in Canada.

“Available evidence indicates that officials at KPC were in communication with M/s Allied Inspection and Testing Inc. to supply the equipment.

M/s Allied Inspection and Testing Inc had in turn initiated communication with Cla-Val to be appointed as an agent of Cla-Val without disclosing that there were bid documents prepared in favour of Cla-Val,” EACC’s report on the scandal states.

RETIREMENT

KPC has lately been in the news after last week’s announcement that Mr Sang is retiring.

Shortly after, he and other senior KPC managers were arrested and spent the weekend in police custody as they awaited to be charged.

Those who were charged are Mr Sang, company secretary Gloria Khafafa and supply chain manager Vincent Cheruiyot.

Others were due to be charged later.

They were charged with abuse of office, engaging in a project without prior planning and wilful failure to comply with applicable procedures and guidelines relating to the management of public funds.

They were released on a Sh3 million bond each with a surety of similar amount and an alternative cash bail of Sh2 million.

They were also required to deposit their travel documents in court.