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Top bosses of scandal-hit Kenya Power arrested

Saturday July 14 2018

Ben Chumo

Former Kenya Power CEO Ben Chumo. The rot at Kenya Power finally has caught up with the management after DPP Noordin Haji ordered for the arrest of current and former officials of the firm over corruption allegations. Mr Chumo was arrested on July 14, 2018. FILE PHOTO | NATION MEDIA GROUP 

WALTER MENYA
By WALTER MENYA
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The rot at Kenya Power finally has caught up with the management after the Director of Public Prosecutions (DPP) Noordin Haji ordered for the arrest of officials of the firm over corruption allegations.

In one swoop, the DPP ordered for the arrest of current and former senior managers over procurement of defective transformers and the irregularities in prequalifying 525 companies for labour and transport contracts.

Through the two contracts – for transformers and labour and transport – Kenyans lost Sh470 million besides the inconvenience the defective transformers have caused.

By Saturday, the Directorate of Criminal Investigations announced that they had arrested former managing director, Dr Ben Chumo, Corporate Affairs and Company Secretary Beatrice Meso and General Manager Regional Co-ordination Peter Mwichigi.

Mr John Ombui, the former General Manager, Supply Chain, was also arrested as well as Peter Mungai Kinuthia, the General Manager, Business Strategy.

MANHUNT FOR MD

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The manhunt was still on for the current MD Ken Tarus, general managers Joshua Mutua, Samuel Ndirangu, Abubakar Swaleh, Stanely Mutwiri and Benson Muriithi.

Along with Dr Chumo and three directors of Muwa Trading Company Limited, which supplied the defective transformers, they will be charged with three offences of conspiracy to defraud contrary to Section 317 of the Penal Code, conspiracy to commit an offence of economic crime contrary to Section 47 A(3) as read with Section 48 of the Anti-Corruption and Economic Crimes Act 2003 and fraudulent acquisition of public property contrary to Section 45(1)(a) as read with Section 48 of the Anti-Corruption and Economic Crimes Act 2003.

Kenya Power had already paid Sh310 million for the defective transformers despite the power company having terminated the contract.

On the scandal of the prequalification of firms to provide labour and transport services, the DPP has listed Mr Tarus, acting general manager finance Harun Karisa, acting general manager supply chain Daniel Ochieng Omuga, general manager Daniel Tare, chief accountant James Muriuki, managers Noah Ogano Omondi and John Mwaura Njehia, and two tender committee members Bernard Githui Muturi and Evelyne Pauline Amondi.

33 DIRECTORS

Along with the staff, the DPP has listed 33 directors and companies to be charged for the loss of Sh160 million that had already been paid for labour and transport contracts.

“Whereas it is regrettable the decision to charge herein will affect most of the KPLC top management, this action is necessary and in public interest to combat and deter corrupt activities within the organisation,” Mr Haji said.

For Dr Chumo, his arrest and expected arraignment in court on Monday will be double tragedy as he could also miss out on a job as chairman of the Salaries and Remuneration Commission (SRC), which he was recently nominated to.

As at the time of Dr Chumo’s arrest, the only obstacle that was standing between him and taking over at SRC, was vetting by Parliament which had been scheduled for July 23.

However, sources at the DPP say that the list released Saturday of people to be charged is still not exhaustive as the second phase is coming with investigations almost done.

INFLATED BILLING

The second phase which could be related to the inflated billing and the scandal of token vendors is likely to see senior government officials among them a principal secretary, senior Kenya Power and Energy Regulatory Commission (ERC) and directors of the vending companies dragged to court.

A class-action suit over billing is currently in court having been brought by lawyer Apollo Mboya who has also been leading the online campaign #SwitchOffKPLC.

The online campaign has gained favour with many Kenyans who have several complaints against Kenya Power.

Weeks before the DPP moved in, Kenya Power had gone on an overdrive hosting magistrates to a cocktail party in Naivasha and again footing bills for a section of MPs during a retreat. Mr Mboya on July 5 protested to Chief Justice David Maraga.

With regard to the defective transformers, the DPP said Kenya Power contracted Muwa Trading Company Limited for a contract sum of Sh408 million.

Since the company does not manufacture transformers, they shopped for a manufacturer in India, Nucon Switchgears PYT Limited.

TRANSFORMERS

“The company embarked on procurement and deliveries of transformers and in the course of the transactions, issues arose about massive failure rate of the transformers and also in delays in the delivery of the gadgets” Mr Haji said.

The directors of Muwa Trading Company are James Njenga Mungai, Grace Wanjira Mungai and John Anthony Mungai.

Officials at the office of the DPP are not ruling out the possibility that the directors could be members of the same family, like the Ngiritas in the National Youth Service (NYS) scandal.

As a result of the disputes, Kenya Power had terminated the contract and Muwa sued the power distribution company for breach of contract but eventually the matter was settled out of court.

However, the DPP noted that the details of the settlement were never disclosed to the courts, which ironically just accepted without questioning.

“The parties carefully avoided expressly stating the terms to the court and in doing so, they acted in bad faith considering this being a matter of public interest,” noted Mr Haji.

APPEAL TO MARAGA

In that regard, Mr Haji is also appealing to Chief Justice David Maraga “and the entire Judiciary” to demand for and insist on full disclosure of such terms.

The DPP, therefore, has proposed amendment to the Civil Procedure Code to enable that happen.

The investigations, the DPP said, revealed that the public lost Sh310 million and could have easily been paid the entire Sh408 million being the contract sum if not for the intervention by investigators.

Interestingly, the investigations found that Kenya Power accepted the defective transformers without sending its engineers for a factory inspection in India “because KPLC felt that it was too costly to have engineers travel to the factory”.

Neither did Kenya Power inspect the transformers when they were received in Kenya.

PROCUREMENT VIOLATION

“Sadly, the acceptance of the transformers by KPLC was done in complete violation of procurement procedures and guidelines and (inspection) waivers were granted in the most unusual manner thus allowing KPLC to expend public funds on goods not of merchantable quality,” Mr Haji noted.

With regard to labour and transport contracts, the investigations found that of the 525 companies that applied for prequalification, many of them could not pass the test.

Nation has learnt that the Institution of Surveyors of Kenya have also written a letter to the effect that the documents used by some of the companies were forgeries.

The contract sum in this tender was Sh255 million and Kenya Power had so far made payments amounting to Sh160 million.

Investigations found that some of the companies were severally allocated contracts of works without any clear indication as to the criteria used.

FAKE DOCUMENTS

Also, investigations have found that most of the companies used fake documents purportedly from the National Construction Authority (NCA) and Energy Regulatory Commission to apply for the tenders.

“It also emerged that 39 of the companies had not been registered at the time of application and prequalification,” the investigations found.

The matter of the 525 companies had first emerged in an internal audit which revealed that 137 of the firms submitted registration certificates whose details differed from the ones at the Registrar of Companies, 244 submitted fake NCA certificates and 67 firms were owned by the same directors. Some of the directors’ names appeared in up to nine companies. Other companies had Kenya Power staff as the directors.

Following the publication of the audit report, Kenya Power announced that it had fired 23 staff members, something officials at the office of the DPP indicated they would be interested to find out more about.