After paying Sh21 billion to a bankrupt Italian firm to build two dams, the National Treasury has something to show for it — thickets and a seasonal stream.
In what is turning out to be a multibillion-shilling phantom project, the Sh65 billion Kimwarer and Arror dams only appear in the fertile imagination of Kerio Valley Development Authority officials and the Treasury, who are now under investigations.
As a matter of fact, officials of the two institutions do not even know where in Elgeyo-Marakwet County the dams should be.
So brazen is the scandal that money was paid to CMC di Ravenna, whose officials have never been on the site, and for a project that has not even been designed.
“When we asked them for the designs, they said they are doing them,” Directorate of Criminal Investigations head George Kinoti said on Monday.
How a bill of quantities was arrived at without the design has baffled investigators, who are trying to unwrap a puzzle that may bring down several Cabinet secretaries.
On February 7 last year, detectives were in the area to conduct an aerial scene investigation.
“We are working with hydrologists to tell us if this seasonal river is viable for such a dam,” Mr Kinoti said.
But even as investigations into the fraud begin, trouble is already brewing.
Banks that loaned the country Sh65 billion for the two dams have written to the Treasury seeking a settlement of their demand notes.
This means Kenya will start repaying loans for a project that exists only on paper.
And if the country does not pay, Kenya’s assets abroad could be targeted by auctioneers.
More so, the Treasury has written to Solicitor-General Kennedy Ogeto seeking legal guidance after it emerged that the loan agent — Intesa Sanpaolo SPA — sent two invoices due November 9, 2018 and December 28, 2018, and that the bankrupt contractor had also sent two more invoices labelled “commitment fee”, which were due on January 18, 2019.
“These invoices have not been paid as the ministry is not sure how to handle them in view of the ongoing investigations,” the Treasury principal secretary said in a February 14, 2018 letter.
Signed on April 7, 2017, the contract between KVDA and a joint venture of CMC di Ravenna and Itinera SPA raised suspicions from the start.
On March 10, 2017, a month before KVDA Managing Director David Kimosop signed the contract, the then Attorney-General Githu Muigai wrote to Treasury CS Henry Rotich seeking his intervention.
“We advise that a due diligence be undertaken on … CMC di Ravena before executing the contract involving key stakeholders, which must include representative from the office of the Attorney-General and the Department of Justice to establish its capacity and capability to carry out the project,” Prof Muigai said.
He also asked for the deletion of a clause in the contract that would have allowed the financier to seize Kenya’s assets abroad if Nairobi defaulted.
“This article is unlawful and should be deleted as it gives the lender the right to file a number of proceedings contemporaneously in several jurisdictions relating to the same matter,” Prof Muigai added.
It has emerged that the due diligence was undertaken between April 25 and May 3, 2017, three weeks after the contract had already been signed.
The due diligence was in relation to the financial, technical and legal competence of CMC di Ravenna to carry out the contract to completion.
In order to cover up their misdeeds, KVDA officials wrote to Attorney-General Kihara Kariuki on September 17, 2018 seeking his “concurrence” with the due-diligence report.
It is not clear why Mr Kimosop sought the AG’s nod after 16 months.
In his letter to Mr Kihara, Mr Kimosop explained that KVDA had not done due diligence because “the financiers had set out stringent timelines and there was need to secure funding after consultations with the relevant government authorities”.
He also said due diligence had been undertaken on CMC di Ravenna after it was given the Itare Dam contract in Molo.
Although CMC di Ravenna later filed for bankruptcy, the KVDA report said “the company is financially, technically and legally sound and is therefore cleared to implement the projects”.
Detectives are now looking for the KVDA officials who wrote the report and the representative from the AG’s office who accompanied KVDA officers to South Africa, where the due diligence on the company was ostensibly undertaken.
“It is our professional opinion that CMC di Ravena has a good standing … to implement Arror and Kimwarer multi-purpose dam projects,” the officials said in their report.
The AG asked every member of the due diligence committee to put their initials on every page of the report.
The dams were supposed to be completed in 60 months.
So far, the terrain is only marked by acacia thickets. There is nothing on the ground to show what Sh21 billion was paid for.
Meanwhile, the DCI will today start taking statements from directors of various local companies that were reportedly paid to offer services to the ghost project.