alexa Regulator probes Sh1.3 billion tender fraud at EPZ Authority - Daily Nation

Regulator probes Sh1.3 billion tender fraud at EPZ Authority

Wednesday November 14 2018

Kilifi Governor Amason Kingi

Kilifi Governor Amason Kingi addresses Export Processing Zones workers at Kikambala village in Kilifi County on July 23, 2017. Mr Kingi does not want a community ranch in Ganze to be sold. PHOTO | KAZUNGU SAMUEL | NATION MEDIA GROUP 

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The public procurement regulator is investigating claims of a Sh1.3 billion tender fraud at the Export Processing Zones Authority (EPZA) that may have seen several firms earn millions of shillings for ghost works.


Public Procurement Regulatory Authority (PPRA) is looking into allegations that nine companies received millions of shillings for goods and services that were neither supplied nor rendered, while other contracts were given to firms associated with board members and top government officials.


In a letter to the EPZA chief executive dated October 30 and signed by the institution’s council member Thomas Otieno, the PPRA director-general ordered that all documents relating to the tenders be submitted for a review.

The deadline for submission of the documents was November 10.


The investigations come as President Kenyatta looks to grow the manufacturing industry as part of his Big Four Agenda, where EPZA falls.

The authority is a government institution mandated to promote, attract and facilitate investment, especially in the manufacturing sector.


PPRA launched investigations after it received an anonymous letter indicating that there were several procurement rules being breached in tender awards, some of which benefited associates of top EPZ officials.

One of the tenders under investigation is no. 26/2015/2016 — construction of extended road networks and maintenance of existing roads at EPZ, Athi River — valued at Sh146 million.


The issues raised include shoddy work of the zone (new) roads and the existing (old) roads. It is alleged that ballast was supplied and later taken away with no works done.

The company that was awarded the tender is alleged to be associated with a Cabinet Secretary.


“Tender No 3/2014/2015; Construction of water infrastructure (tank) was awarded at Sh300 million to Hilora Construction Company but it is alleged that shoddy work was done and the beneficiary was a board member, a Mr Abdi, and which saw it exaggerated,” reads the letter to EPZA, adding that there was collusion between managers at the company in the award of the contract.


Another tender 30/2015/2016 — provision of EPZA staff cover — was awarded for Sh26 million to a company owned by a son of a former powerful minister during President Daniel Moi’s era. It is alleged that M/s Kenbright Health Administrators belong to Mr Ken Nyachae who was then a board member.

The firm had also been given a tender worth Sh31 million in the 2016/2017 financial year.


Also under investigation is the award of Sh200 million for construction of trunk sewer pipeline phase 2 lot 3 at Athi River EPZ to M/s Dexterious Ltd.

It is alleged that the tender was paid in excess of Sh13.3 million contrary to section 53 (8-9) of Public Procurement and Disposal Act 2015.


The authority is also probing the Sh165 million awarded to M/s Atticon Ltd for the construction of a perimeter wall at EPZ Athi River, with allegations that the approved budget was Sh70 million.

This means the tender was overpaid by Sh95.2 million.


Tender no. 12/2015/2016 — the construction of internal roads and civil works phase 1 at Kenya Leather Park Kinanie — was awarded to M/s Marcann Constructors Ltd for Sh120 million.

The firm is alleged to belong to or associated with the former CEO’s brother.


Tender no. 12/2016/2017 — proposed decommissioning of dumpsite — was given to M/s Marcann Contractors Ltd awarded for Sh150 million. This is a suspicious repeat award to a firm suspected to be associated with the CEO’s brother.

Construction of road infrastructure lot 2 was awarded for Sh196 million to M/s Jomawak Enterprise Ltd.

Shoddy works were allegedly done at an exaggerated cost.


It is also alleged that other tenders were exaggerated and there were no due diligence reports.

“Pursuant to the provisions of section 34 of the Public Procurement and Asset Disposal Act, 2015, submit your response to allegations cited above,” reads the letter to EPZ Authority.

Mr George Makateto is the acting chief executive of EPZA after he replaced Fanuel Kidenda this year.