Senior Kenya Pipeline Company managers have been trying to cover-up a scandal in which an insider used briefcase companies to siphon billions of shillings from the parastatal's coffers.
The massive fraud, first unearthed 16 months ago, is estimated to have cost KPC Sh2 billion. It was orchestrated by three relatives using seven different companies, some of which were registered using forged documents.
How much the senior management knew about this fraud is still not clear, but detectives believe there is now “overwhelming evidence” to charge the three relatives and a lawyer.
Before detectives tightened the noose around the three, KPC had bought newspaper space to defend the tenders, while the suspects filed libel cases after the Nation exposed the scandal in March 2017.
The cast includes a Kenya Pipeline welder, identified as Mr Francis Amina Juma, his nephew, Mr John Huba Waka, and Mr Waka’s wife, Ms Beryl Aluoch Khasinah, an employee of the National Hospital Insurance Fund (NHIF). They are now part of an ongoing investigation into funds allegedly channelled by KPC to their phantom companies as payments for supplies.
Initial investigations by the Sunday Nation had centred on how Aero Dispenser Valves Limited managed to bag a Sh600 million international tender to supply aircraft refuelling equipment for Nairobi’s Jomo Kenyatta International Airport. When it won the tender, Aero was only a 20-month-old company based in a single room in Gill House, Nairobi.
Now, detectives have finally zeroed in on the three relatives and a comprehensive report seen by the Nation reveals the inside workings of this and other dubious companies.
The report, signed by the Director of Criminal Investigations, Mr George Kinoti, and sent to the Director of Public Prosecutions, Mr Noordin Haji, asks him to review the new bundle of evidence which includes bank statements “with a view to charging the suspects”.
However, according to the documents, Ms Khasinah has told detectives that she does not know what the companies do although she remains a director and signatory. According to her, all the procurement that happens is done by her husband, who tenders, procures and delivers the supplies to the Kenya Pipeline Corporation.
She also told detectives that it was her husband’s uncle – Mr Francis Juma – who incorporated her name into some of the companies “without her knowledge” and that he is the one who “assists” her husband, Mr Waka, in all tendering engagements.
Mr Waka told detectives that he was the one who registered the seven companies. However, he could not trace one of the directors, Ms Ruth Auma. Detectives believe that Ms Ruth Auma is a fictitious name.
Although Mr Waka deals with hundreds of millions, his companies do not have a formal staff management structure. And when asked about it, the DCI report says, “the two could not explain themselves well". They claimed that they did not have documents and that they were only agents for certain companies in the diaspora.
During the investigations, Mr Waka is alleged to have written to the Independent Policing Oversight Authority (IPOA), claiming that the investigating officer had obtained Sh24,000 from him and threatened to kill him together with his lawyer, only identified as Mr Nyandieka.
“Following those false allegations, the investigating officer was summoned by the Internal Affairs Unit (IAU) and, upon explaining his part, he was cleared to go back and proceed with the investigations,” says the detailed report.
This explains why, in the report, Mr Kinoti has accused unnamed cartels of “trying to subdue the truth from being revealed through investigations". He says the cartels were out to malign the name of the investigating officer and thwart the investigations "by all means possible”.
Investigations into one of the related companies, which was awarded a Sh47 million tender to supply mechanical seals, found that the entered LR number 209/8838 and whose directors are the non-existent Ruth Auma, Mr Waka and his wife, was a forgery and does not belong to Gill House, where the company purported to have an office. More so, detectives say, the company has never been a tenant at Gill House.
While Kenya Pipeline had in its adverts maintained that Aero Dispenser Valves company was owned by Jackson Odero, Michael Opudo and Willbard Otieno, the detectives say that the company is owned by Beryl Khasinah and Francis Obure. More so, the company has never filed its returns since November 2014 despite receiving contracts worth Sh647 million.
In its registration papers, the company – which has never done any other business with other entities apart from KPC – had initially claimed it was a tenant at Utalii House on Uhuru Highway, but the detectives traced its office to a shabby room on the second floor of Gill House.
This office was rented by a Mr Caleb Mukuna, who told the detectives that he had been approached by Mr Francis Juma and Mr John Waka to make an application for office space. In the tenancy documents, he is “purported as a technical director” although he was a caretaker and operates a secretarial service on the side.
Detectives found that “no activity has even been seen … in the said office” although the rent was paid by Mr Waka. Mr Mukuna had temporarily leased the idle space to a tailor.
“The transfer of the company from the former directors to the current ones was all a forgery to conceal the identity of the real directors and activities of the company,” said the DCI report.
It is also claimed that the resignation letters and affidavits of “the three old men” Mr Opudo, Mr Wilbird Otieno and Philemon Odero, tendered to the registrar of companies, were forgeries.
The detectives want a lawyer, Mr Nyandieka, to be charged for that. However, according to the detectives, Mr Nyandieka “has confirmed” that the affidavits were a forgery and is on record as saying that he had no knowledge of them.
Interestingly, Mrs Khasinah says in her statement that Mr Nyandieka is the family lawyer. He was introduced to them in 2008 by Mr Juma. However, Mr Nyandieka says in his statement that he came to know the family in 2015 when he represented them in a corruption case.
Another company, Thermo Dynamic General Supplies, which was paid Sh400 million to supply composite sleeves, was also a briefcase entity and has never had an office at Uchumi House as purported in its official papers. The LR209/8948 “does not appear anywhere in the records of the land registrar” while the post box address given belongs to another person.
Another of Mr Waka’s companies had a non-existent office at Anniversary Towers in Nairobi. Known as Trans African Pipeline, the company’s two other directors were fictitious or had their names forged.
While purported director Sam Awiti was never traced, Jordan Abeka was traced but denied knowledge of being a director. Also, the LR 209/1/92 where the office is located is non-existent.
Mr Waka was also running another briefcase company known as Continental Pipeline Engineering, which he alleged to be based on LR 209/1/92 View Park Towers.
Again the LR number is non-existent. Detectives have found that the change of the company’s name from Trans African Pipeline was based on a forged resolution.
A law firm, Ochanda and Onguru, has disowned the company resolution document. The same company resolution document was purported to have been commissioned by Mr Ngaah Jairus, now Judge of the High Court. Mr Ngaah was traced and he disowned the commissioning, signing and stamping the document.
Another briefcase company known as Boiler and Petroleum Piping Systems claimed to have an office on Kenyatta Avenue on LR 209/4631 but this plot number is non-existent.
Another Nairobi law firm has denied that it prepared the Memorandum and Articles of Association used to register the company in 2002 with Mr Waka as a director.
The other directors are Mr Fredrick Waka and Mr Ezekiel Wambaya. The company is said to have won a Sh270 million tender to supply gaskets to KPC.
The detectives also claim that a company owned by Mr Juma and his wife Joyce Atieno won a Sh637 million tender to supply mechanical rings and rubber seals.
While the company, Nairobi General Supplies Limited, was said to have been registered by Ndichu and Mutua Advocates, the Law Society of Kenya has told detectives they do not have such a law firm in their records. The registrar of companies has also dismissed the company documents as forgeries.
All the law firms that were alleged to have commissioned registration documents of the seven companies have dismissed the signatures and stamps as forgeries while all the other directors – apart from Mr Waka and his wife – have denied knowledge of having shareholding in the entities.
Detectives have been following the trail of money from the National Bank of Kenya and wanted to know why due diligence was never done on the said companies.
Also, the failure by the banking officials to cooperate during the investigation has thrown some of them into the centre of the scandal.