KPC staff ordered to refund Sh182m in tender fraud case

Sunday December 15 2019

The Kenya Pipeline Company Nakuru depot. PHOTO | FILE | NATION MEDIA GROUP


The Ethics and Anti-Corruption Commission (EACC) has demanded that two senior Kenya Pipeline Company employees personally pay back Sh182 million alleged to have been fraudulently paid for a contract.


In the letters sent to the general manager for Finance Samwel Odoyo, Mikwa Owuor and procurement officer II Fredrick Ogenga, the EACC has demanded that they refund the money, paid by KPC to Aero Dispenser Valves Limited, with interest. The watchdog claims that the money was irregularly paid for procurement and award of Tender No. SU/QT/3264F/14 for hydrant valves.

The two letters were received by Odero Osiemo and Company Advocates on December 3, 2019.

"We hereby demand you pay a sum of $1,761,813.53 (approximately Sh182 million) together with interest thereon … Take notice that unless the said sum is paid to the Commission within seven days of this letter, we shall institute recovery proceedings against you without any further reference to you and at your own risk as to costs and any other incidental expenses arising therefrom," one letter reads.



The EACC says it launched investigations into an alleged fraudulent scheme by KPC’s tender committee to use public funds through direct procurement of hydrant pit valves, complete with isolation valves and operating spares at a grossly exaggerated contract price of Sh660 million, representing an overpayment of 717 per cent of the price of acquiring the items from the original parts manufacturer, an excuse that had been used for the direct procurement.

Investigators say they established that had KPC bought the equipment from the original parts manufacturer Cla-Val Ltd, according to the justification given for direct procurement, it would have spent about Sh59.4 million. "Therefore, the award of Tender No. SU/QT/3264F/14 to Aero Dispenser Valves Limited as a purported agent of Cla-Val was fraudulent, illegal and void ab initio.”

Further, investigations found that Aero Dispenser Valve Limited did not have the authority to supply the equipment and spares from the Canadian manufacturing company as indicated in the documents presented to the KPC.


The anti-corruption body says that as a member of the tender committee that awarded the contract through a joint fraudulent scheme, Mr Ogenga made or caused the payment of $2,546,076.31 (Sh262 million) to Aero Dispenser Valves Ltd, being 40 per cent of the tender price.

Mid-2018, both EACC and the Directorate of Criminal Investigation launched investigations into alleged procurement malpractices at the KPC resulting in the arrest and arraignment of several managers, including Mr Odoyo, Mr Ogenga, former managing director Joel Sang, procurement manager Nicholas Gitobu and welder Amina Juma, who was linked to Aero.