Glaring sins put KVDA on Edward Ouko's radar

The embattled Kerio Valley Development Authority (KVDA) has been in the crosshairs of Auditor-General Edward Ouko regarding unexplained expenses or blatant abuse of power in the execution of key projects over the last eight years.

With the focus now on the Arror and Kimwarer dams projects in Elgeyo-Marakwet that are under the agency, it has emerged that KVDA’s financial books have always been flagged for misuse and unexplained use of public money.

From a 2014/15 report by Mr Ouko, which is the latest as the audit office is yet to make public subsequent reports, KVDA, under Mr David Kimosop, the managing director, was put on the spot for acquiring a loan facility of Sh400 million from KCB without following the Public Procurement and Disposal Act.

The money was for a new wing of its two-tower building in Eldoret.

KCB LOAN

In a strongly worded audit, Mr Ouko did not mince his words, indicating that KVDA had not provided a level ground for other banks that were interested in the deal, questioning whether there were underhand manoeuvres in the acquisition of the loan.

Mr Ouko said the agency appeared to have predetermined the deal and only offered the tender advertisement later to cover initial misdeeds.

From the auditor’s findings, the tender was awarded after a deal had already been struck with KCB.

“Although the financing deal had been approved and concluded with the Kenya Commercial Bank, an invitation to Tender No KVDA/RFP/40/2014-2015 was later advertised in the Standard and Daily Nation newspapers of January 7 and 8, 2015, respectively, requesting for proposal for a loan facility of Sh400 million,” the report said.

BIDDERS

From the call to tender, Co-operative Bank, Housing Finance, Equity, Chase and CBA expressed interest. Chase offered the loan with the least interest of 12.5 percent. KCB offered 13 percent.

Others were higher. However, it was discovered that KCB changed midway, lowering the interest below Chase’s.

“The bid prices and or any modifications were not recorded in the tender opening register availed as is required by the Public Procurement and Disposal Act.

"In unclear circumstances, Kenya Commercial Bank on Wednesday, January 21, 2015 (same day as tenders were opened), wrote a letter to adjust their bid price to 12.41 percent per annum from the initial quote of 13 percent and therefore became the lowest bidder,” the auditor reported.

INTEREST

The bank said that it had adjusted the interest following a change in the Kenya Banks Reference Rate, a claim that was found to be untrue.

“The bank stated in its adjustment letter that its interest quote of 13 percent (KBRR plus 3.87) per annum dated 15 January 2015 was based on the prevailing Central bank KBRR at the time of 9.13 percent.

"This was however a misrepresentation of facts as the Central Bank KBRR on January 15, 2015 was 8.54 percent and not 9.13 percent."