alexa Three EPZ Authority managers suspended over Sh1.3bn scandal - Daily Nation

Three EPZ Authority managers suspended over Sh1.3bn scandal

Sunday November 25 2018

EPZ

Workers at a fresh produce firm at EPZ Athi River. The EPZ Authority has suspended three senior managers for 90 days over procurement irregularities involving billions of shillings. PHOTO | FILE | NATION MEDIA GROUP 

OUMA WANZALA
By OUMA WANZALA
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Three senior managers at the Export Processing Zones Authority (EPZA) have been suspended for 90 days and the Directorate of Criminal Investigations (DCI) invited to probe procurement irregularities running into billions of shillings.

Also roped into the investigation is the Ethics and Anti-Corruption Commission (EACC) which will look into allegations of Sh1.3 billion tender inflation, which may have seen several firms paid millions of shillings for ghost works and irregular sale and lease of land.

There are claims that 13 companies received hundreds of millions of shillings for goods and services that were never supplied, while other contracts were awarded to firms associated with board members and top government officials.

The decision to send home the three managers — Mr Tom Soigwa, general manager, commercial and technical services, Ms Benta Omollo, general manager, finance and administration, and Ms Maria Ouya, corporation secretary — was arrived at after an EPZA special board meeting number 7 of 2018 which took place on November 21.

INVESTIGATIONS

“This action has been taken to enable the EPZA and other investigative agencies conduct investigations into the allegations raised in the Public Procurement Regulatory Authority letter dated October 30, 2018 which is a matter of great public interest and the letter dated November 19 2018 from the Inspectorate of State Corporations among other emerging issues.

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Your continued presence at the EPZA may interfere with the investigations,” reads the letter to the three dated November 22 and signed by acting chief executive officer George Makateto. Mr Makateto replaced Mr Fanuel Kidenda this year.

The board chairman Paul Gicheru, who was recently appointed to clean up the mess at the authority, confirmed that DCI and EACC have been invited to probe the corruption allegations.

CORRUPTION

“We have invited them so that they can look at the authority’s activities and nail those who were involved in corruption; they must face the full force of the law,” Mr Gicheru told Nation.

The detailed report of the board dated November 22 on malpractices at the authority has since been submitted to Industrial, Trade and Co-operatives Cabinet Secretary Peter Munya.

“The issues raised by Public Procurement Regulatory Authority are serious allegations on the part of EPZA regarding 13 procurements while the Inspectorate of State Corporations has requested for several documents involving the Kenya Leather Park pointing to a possibility of malpractice on the part of EPZA,” reads part of the report.

According to the letter to the CS, the board reviewed close to 13 projects, part of which were the subjects of inquiry by the Public Procurement Regulatory Authority.

HUGE VARIATIONS

“In almost all the projects, the contracts were amended and huge variations made. The Public Procurement and Disposal Act 2005 — under which all the works, goods and services were procured under section 47 of the said Act — sets out the legal requirements which must be met before a contract which has already been awarded and executed can be amended or varied,” reads the report.

It goes on: “The board audit committee perused all the availed documents and did not come across any tender committee minutes or documents to show that any applications were placed before the tender committee for considerations and or approval or that any justification was given for the variations which involve colossal sums of money.”

The report also states that variations were ostensibly authorised by the former chief executive officer and paid for by the general manager, finance and administration, in spite of the glaring irregularities without any approval by the board.

RETENTION MONEY

It states that the other common feature of the variations is that they were initiated when between 90 per cent and 97 per cent of the contract sum had already been paid for and the audit committee confirmed that some of the variations were beyond the percentage threshold for variation allowed by law.

“In most of the projects, retention money was paid before certificates of completion and certificates of making good defects were issued contrary to the law.

“Retention money cannot lawfully be paid before the completion of a project and before defects are made good,” reads the report.

It adds that several projects were started before the relevant permits and authorisations had been obtained from the relevant authorities like the National Environment Management Authority (Nema) and Water Resources Management Authority (WARMA) while the value at which tender awards were made were also unreasonably inflated contrary to the provisions of section 30 of the then applicable Act.

RANDOM SAMPLES

The report states that the board was able to obtain nine random samples of tender evaluation and tender committee reports which showed glaring irregularities in the award of some of the contracts.

“One such tender [was] number 2/2014/2015 for lot 2 for the construction of paved roads. The report by the tender evaluation committee dated December 19, 2014 shows that the tender which was for two lots was evaluated and conclusion and the tender evaluation made the recommendations,” adds the report.

According to the board, “in lot 1, the lower evaluated responsive bidder, Aridlands construction Ltd, satisfies the bid criteria and thus recommended for a contract award at Sh253 million. In lot 2, the lowest evaluated responsive bidder Jomwak Enterprise Limited satisfies the bid capacity criteria and thus recommended for contract award at a cost of Sh409.8 million”.

On the other hand, the tender committee considered the tender evaluation committee report on December 22, 2014 and substituted the recommendations of the tender evaluation committee and instead awarded the two tenders as follows:

ROAD INFRASTRUCTURE

“Tender for the construction of the road infrastructure, lot 1, to the most responsive lowest evaluated bidder M/s Jomwak Enterprises Ltd at their quoted bid sum of 196.8 million and tender for the construction of road infrastructure lot 2 to the most responsive second lowest bidder M/s Aridlands Construction Company Ltd at their quoted bid sum of Sh411.8 million.”

The board observed that under the provisions of the Public Procurement and Disposal Act 2005 and the Public Procurement and Disposal Regulations 2006 as amended from time to time, a tender committee can only accept, reject or remit back a recommendation of award to the tender evaluation committee with reasons for re-consideration but cannot substitute an award or interchange recommendations of award made to two bidders in a manner which is inconsistent with the recommendations of the tender evaluation committee.

“Further the two reports show that the award for lot 2 was made to the second lowest evaluated bidder in respect of all the bids submitted for that lot contrary to the provisions of section 66(4) of the governing Act. The board further doubts that a tender whose scope is indicated as 6km of a normal road can cost a total of Sh502 million inclusive of variations,” reads the report.

TENDER

The board is also concerned with the decision by the management to pay Sh27 million to the contractor for tender 03/2014-2015 for construction of a water tank despite a resolution by the board that the money should not be paid.

“EPZA land at Athi-River was annexed in January 2017 and sold irregularly to a private company known as Mansi Vegext EPZ Limited which reportedly only paid the Sh8 million to EPZA. The title for the public land which measures 1.036 hectares bearing the description L.R No. 18474/117 was allegedly transferred to the private company,” reads the report, noting that the land being a gazetted EPZA land, there was no evidence that it had been degazetted by the minister at the time of the purported sale under the provisions of section 15 of the EZPA Act (chapter 517) of the laws of Kenya.

PRIVATE PETROL STATION

The report adds that there is ongoing construction of a private petrol station on L.R.No.18474/10 and 11 at Athi River EPZA which is also a gazetted EPZA land.

“The available documents shows that the land measuring five acres was leased to a company known as Netgas and Energy Limited in October 2016 … the business of selling fuel, food drinks and other related activities are not contemplated or within the provisions of the Act,” reads the report.