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Date with fate: Kinoti targets three Cabinet secretaries

Monday March 11 2019

Mwangi Kiunjuri.

Agriculture Cabinet Secretary Mwangi Kiunjuri. He will questioned by the DCI over multi-billion shillings dams tender with his counterparts Eugene Wamalwa (Devolution) and Simon Chelugui (Irrigation) PHOTO | FILE | NATION MEDIA GROUP 

JOHN KAMAU
By JOHN KAMAU
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Three Cabinet Secretaries are scheduled to appear before the Directorate of Criminal Investigations for questioning over the awarding of a multibillion-shilling tender for construction of dams to a questionable firm.

At the same time, the Nation learnt yesterday that the firm in question, CMC di Ravenna of Italy, had been finally kicked out of Nepal following accusations of poor execution of project timelines, and that it had been downgraded by an American rating agency, Standard and Poor’s, to “junk company” category D.

COLOSSAL AMOUNTS

Mr George Kinoti, the Director of Criminal Investigations, told the Nation that the ministers who will receive their summons to the DCI either today or tomorrow are Agriculture’s Mwangi Kiunjuri, who was at the helm of the Devolution ministry when the Kimwarer and Arror dam contracts were signed; current Devolution CS Eugene Wamalwa; and their Water counterpart Simon Chelugui, who will be questioned over the abandoned Itare Dam in Nakuru County, also awarded to the same Italian firm.

Besides the Cabinet Secretaries, the DCI said he will also be summoning “all past and present principal secretaries” from the time the projects were conceptualised.

“This is a complex investigation and we want to hear from all those who were involved to understand why there was a rush to award the contract,” said Mr Kinoti.

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Also lined up to appear this week is the Managing Director of Kerio Valley Development Authority, Mr David Kimosop, who signed the Arror and Kimwarer dam contracts.

The investigators are seeking to understand how a company with poor international ratings was awarded such a huge tender and paid colossal amounts of money in advance. At the time it clinched the tender, CMC di Ravenna was categorised by Standard and Poor’s as ‘CC’, meaning it was highly vulnerable.

POST-FACT

Failure by the Italian firm to commence construction of both the Arror and Kimwarer dams, even after receiving Sh7 billion, has raised many questions and divided the Jubilee Party, with allies of Deputy President William Ruto saying the ongoing investigations are a political witch hunt.

The National Treasury said last week that a total of Sh21 billion has already been paid to the contractor and an insurance firm in Italy. Detectives have already questioned National Treasury CS Henry Rotich and handed a preliminary report to the Director of Public Prosecutions (DPP), Mr Noordin Haji.

The DPP last Friday asked Mr Kinoti to also investigate the tendering process, as well as the discrepancies in the identities of the parties that bid for the projects and those who won the tenders.

Investigators will also inquire into why the designs for the dams were being done “post-fact”, meaning after the payments and contracts had been made.

They have also been asked to check “the involvement of a large number of government officials in the entire process”, which explains why reactions to the investigations have taken a political turn.

Elgeyo-Marakwet Senator Kipchumba Murkomen, on whose county the two projects are located, has accused Mr Kinoti of playing politics rather than fighting corruption.

RATINGS

“Politics should be left to politicians,” said Mr Murkomen at the Senate last week. “Other matters of the State, such as fighting corruption and national development, should be done objectively. I urge the DCI, before he embarks on any investigations of this nature, to engage experts with the necessary knowledge on these types of contracts and how such projects are implemented.”

While politicians have been arguing that CMC di Ravenna is being unfairly targeted, and that the investigations are political, the lowering of the company’s credit rating by Standard and Poor’s, one of the world’s leading authorities in the field, means it may take time before the firm earns the confidence of international banks. Construction companies rely on these ratings to get money to finance projects.

The poor financial health of the Italian firm is thought to be the reason it abandoned Kenya’s Itare Dam and failed to start works at the Arror and Kimwerer sites. The company also won the tenders for construction of Radat Dam in Marigat at a cost of Sh20 billion, and the Kithinu Dam in Meru County, which will cost Sh26 billion.

Unlike in Kenya, where CMC di Ravenna has yet to be put to task over the pending projects, Nepal’s electricity authority issued a 28-day deadline to the firm to resume the works or have its lucrative contract terminated, according to the Himalayan News Service.

The firm did not heed the notice, and last week Nepal cancelled the two contracts awarded for hydropower and drinking water projects. Also, it fired a minister who wanted the firm given more time.

CASH FLOW

On Friday, Nepal’s Tanahu Hydropower Ltd said it would cash the performance guarantee parked by the Italian contractor at Nepal Investment Bank.

Local newspapers quoted the hydr-power project managing director, Mr Pradeep Kumar Thike, as saying the bank had promised to release the performance guarantee on Sunday (yesterday).

The loss of Nepal’s Tanahu Power Project, and the poor credit rating, adds to the global woes of CMC di Ravenna, which has already applied for “preventive composition” in an Italian court to allow it to forgo payment of its creditors as it struggles to survive imminent collapse.

Last year, the company admitted in a press statement that it was going through “a moment of cash-flow tension” and announced it would not be able to pay back some loans that had matured.

When lowering the credit rating of the company S&P Global said that CMC’s application at the Italian court “foresees the suspension of payments related to outstanding obligations”, and that, as such, “we do not expect CMC to make regular payments on its outstanding debt”.

How the cash-flow pressure will impact on the Kenyan projects remains to be seen. As the DCI continues to investigate, a lot of focus will be on how due diligence, if any, was carried out.

“We want to understand why the officials were in a hurry to award these tenders and lift the lid on this theft,” said Mr Kinoti.