Final audit exposes tender rot at IEBC that could have led to loss of billions

The Independent Electoral and Boundaries Commission (IEBC) may have lost billions of shillings in the procurement of goods and services for the 2017 General Election and fresh presidential election, according to the final internal audit report.

The report, which was issued on August 20, reviewed 31 contracts the commission entered into during the elections, all worth Sh6.2 billion.

Of the tenders that were reviewed, the auditors said they could not provide an assurance that the taxpayer got value for money in ten contracts worth Sh4.6 billion, or 74 per cent of all the value of contracts.

EXAGGERATED PRICES

“This was largely due to acquisition of goods or services at exaggerated prices and lack of market survey reports, among other factors,” the report states.

The report implicates the suspended CEO Ezra Chiloba, the directorates of finance, ICT, Supply Chain Management and Legal and Public Affairs who the auditors recommended they explain some of the decisions they made leading to the possible loss.

The report has been submitted to IEBC commissioners. Commission chairman Wafula Chebukati on Friday issued a brief statement announcing the adoption of the report.

CRIMINAL INVESTIGATION

“The Internal Audit on Major Procurement of goods and services for 2017 elections has been concluded and a report submitted,” Mr Chebukati said.

“The report confirms the concerns raised by the plenary before commissioning of the audit. The report will inform internal actions the commission will take in terms of dealing with the issues raised,” he added, hinting at looming senior staff changes at the secretariat which could target Mr Chiloba. The chairman further said the report will be shared with “relevant agencies for necessary action,” most likely the Directorate of Criminal Investigation (DCI), the Office of the Director of Public Prosecutions (ODPP) and the Ethics and Anti-Corruption Commission (EACC).

But the audit report seems to have re-awakened the old ghosts at the commission with Mr Chiloba not taking anything lying down.

COMPULSORY LEAVE

“While I don’t find it fair to the country to keep fuelling the chairman’s (Mr Chebukati’s) continued mind games, I am certain that you are aware that I do not have the said internal audit report,” Mr Chiloba said when Sunday Nation reached out to him for his reaction.

“If you recall the purported plenary meeting sending me on compulsory leave on April 6 is said to have resolved that the Auditor General would be invited to conduct a comprehensive audit into the General Election procurement.

“Even then, the Auditor General has been carrying out the audit and hopefully will finalise the report. Unfortunately, as the accounting officer, I have not been there to respond to any audit queries. For now, I can only hope the acting CEO and the management team will be able to provide responses to any queries arising from that audit,” said Mr Chiloba.

INTERNAL STRIFE

The performance of the audit has been a major source of internal strife at IEBC. In April, the commission sent Mr Chiloba on compulsory leave to allow for “a comprehensive audit of all major procurements relating to the 2017 general and fresh presidential elections.”

Following the decision to send the CEO on compulsory leave three commissioners namely Ms Connie Maina, Dr Paul Kurgat and Ms Margaret Mwachanya on April 16 announced their resignation from IEBC citing lack of confidence in Mr Chebukati’s leadership.

CLOSED DOORS

Ms Maina and Ms Mwachanya were on Friday at the commission offices for unspecified mission and failed to meet Mr Chebukati. Instead, they met with commissioner Abdi Guliye and acting CEO Hussein Marjan but the Sunday Nation has not been able to get what they discussed behind closed doors. Their return to the commission offices four months after they resigned however caused confusion with secretariat staff reportedly ignoring them and Mr Chebukati refusing to meet them because they did not have an appointment.

Besides the coordinated resignation of the three commissioners in April, which was meant to paralyse it and force the remaining three commissioners Mr Chebukati, Prof Guliye and Mr Boya Molu to also resign, Mr Chiloba also moved to court to challenge the decision to send him on compulsory leave.

CHALLENGED SUSPENSION

The court ruled in favour of the CEO but on the same day the Employment and Labour Relations Court delivered its judgement, the CEO was suspended and remains out of office. Chances of him returning to his former position, IEBC insiders told Sunday Nation, are slim. Mr Chiloba once again challenged his suspension in court, this time unsuccessfully.

According to the audit, IEBC awarded Safran Identity & Security (SIS) a Sh2.5 billion tender for the provision of election technology support for the October 26 fresh presidential election on an expired performance guarantee.

The audit noted that IEBC relied on the Sh423.6 million August 8 performance guarantee, which was signed on March 31, 2017 and expired on August 15, some two months before the fresh presidential election, to award Safran the fresh presidential election contract.

SERVICES DELIVERED

“It (the performance guarantee) was therefore not valid by the time the Amendment to the Agreement was entered on September 28, 2017,” the audit notes.

As it came to pass, the audit found that Safran did not undertake system technical training and moreover, elections did not take place in 21 constituencies. The audit also blames Mr Chiloba for failing to constitute a contract implementation committee “to confirm the right quality and quantity of goods, works or services delivered and issue a certificate to the recipient accounting officer in line with Section 150(3) of the PPADA, 2015.” Regarding the technology used on the fresh presidential election, the audit also found the KIEMS was over-priced.

Even though it was only one election, the KIEMS system cost was Sh2.5 billion or 60 per cent of what IEBC spent in the General Election when there were six elections being done.

TWICE THE AMOUNT

Similarly, Safran charged IEBC Sh443.8 million for Election Day support, almost twice the amount spent for the same support function during the General Election, which was Sh242.5 million.

“The explanation given was there was an increase in Safran Identity & Security technical personnel from 94 during the General Election to 292 during the fresh presidential election. This explanation was unsatisfactory since there was no proof all the 292 staff actually reported and supported polling stations during the fresh presidential election. In any case, elections did not take place in 21 constituencies,” the audit observed.

Training costs also shot up by Sh82.5 million from the Sh181.9 million spent during the General Election to Sh264.4 million during the fresh presidential election.

EVALUATION REPORT

The cost of KIEMS kit preparation and set up, which stood at Sh831.3 million, was also found to have been overpriced. An earlier Evaluation Report of September 27, 2017 had noted this cost would not have been incurred had training been done as per the agreement of March 31, 2017.

Similarly, the audit notes the Sh384.6 million IEBC paid to Safran for programme and project management was not only high but also unnecessary.

“There was no equivalent activity during the General Election and the explanation that it was due to large staff deployment is not supported by actual schedule of deployment. Actual performance is also not confirmed by a Contract Implementation Report.”

TRANSMISSION NETWORK

Regarding the tender for the supply and implementation of results transmission network, the audit established even though Airtel networks was only able to supply 1,000 Thuraya IP SIM loaded with data bundle, the commission proceeded to award it the contract to supply 1,553 units.

The mobile network operator had been contracted to provide satellite phones to cover the 11,115 polling stations, which were out of 4G or 3G reach. Eventually, Airtel only delivered the 553 additional units on September 4, 2017, weeks after the elections, meaning they “were not used for the intended purpose hence value for money was not realised at this stage.”

Meanwhile, it has also emerged that IEBC engaged Oracle Technology Systems (Kenya) Ltd for the provision of Oracle database and security solution for Sh273.6 million without a signed contract. Moreover, IEBC disregarded practice and awarded the tender exclusive of taxes.

CONSULTANCY FIRM

On the provision of strategic communication and integrated media campaign consultancy services, the audit found that IEBC awarded the contract to Scanad Kenya Ltd despite the company quoted price being 118 per cent above the commission’s budget of Sh350 million. Transcend Media Group Ltd which had the lowest evaluated price had quoted Sh477.4 million which was also 36 per cent above IEBC budget.

Moreover, the secretariat disregarded the plenary resolution to engage a consultancy firm for four months and went ahead to enter a one-year contract with Scanad.

A similar occurrence of awarding contracts above the commission’s budget was also noted in the tender for installation of IEBC primary and secondary data centre equipment which was awarded to Africa Neurotech at a cost of Sh249.3 million which was 92 per cent above the commission budget of Sh130 million. Eventually, the data centre equipment was not ready by the time the General Election was held.

PROPER CONTROLS

In conclusion, the auditors noted there were gaps relating to contracts between IEBC and the vendors.

“For example, lack of itemisation of deliverables and costing of the same provided grey areas … Going forward, the commission should institute proper controls in the area of contracting to prevent third party risks and financial losses. Specifically, the commission should develop a Contracting Policy and Procedures for adoption and future guidance,” the audit remarks.