The National Treasury has disowned the Kenya Ports Authority management over controversial tenders worth Sh2.7 billion, saying the expenditure was made without its authorisation.
In a letter dated November 22, 2019, the Treasury says the money was spent before approval of the supplementary budget.
“The Cabinet secretary Ministry of Transport and Infrastructure was to grant approval for the request and subsequently seek the concurrence of the National Treasury … there was no prior approval for Kenya Ports Authority management to procure … before approval of supplementary budget 2018/19 FY,” Principal Secretary Julius Muia says in the letter.
The tenders are under investigation by Director of Criminal Investigations George Kinoti.
KPA Managing Director Daniel Manduku has moved to the High Court seeking “anticipatory bail” — and seeking to have the investigations by the DCI dismissed as “unlawful and illegal”.
Judge Erick Ogola of the High Court in Mombasa will rule on the matter today.
Dr Manduku has told the High Court that the DCI has overstepped its mandate by investigating matters that should be investigated by the Ethics and Anti-Corruption Commission (EACC) and wants the court to stop the Director of Public Prosecutions (DPP) from bringing charges against him based on an investigative report and recommendations by the DCI.
“The DCI investigations against the petitioner are illegal and the subsequent recommendation to the DPP to charge him with many offences is in contravention of Section 35 of the Anti-Corruption and Economic Crimes Act,” Dr Manduku’s lawyers argue.
Dr Muia is reported to have told investigators that he had not approved the controversial Makongeni concrete works and that the procurement should not have been done before the approval of the supplementary budget.
The KPA officials had in a letter dated January 30, 2019 sought the approval of Treasury to shift Sh2.5 billion of the Sh3 billion previously set aside for buying a piece of land at the Inland Container Depot in Nairobi and use Sh500 million to concrete the Makongeni yard and Sh2 billion for dredging the port.
While Treasury had received the proposed budget, Dr Muia says, this was subjected to “rationalisation” and a recommendation for approval was only given on September 24, 2019.
By this time, Dr Manduku had already awarded the tenders and paid for the Makongeni works without knowledge of the Treasury.
WASTAGE OF RESOURCES
Records indicate that nine contractors were given the tender, which was split in smaller portions to skirt legal requirements for tendering for capital projects and to disguise it as repair works.
The nine bills of quantities were prepared by a senior works officer, Anthony Muhanji, and the total contract sum was Sh506 million.
An investigation report describes the splitting as “a clear conspiracy to avoid tender procedures, to wit, section 91 of the public procurement and asset disposal act … and with the aim of avoiding open and competitive tendering process.”
The Makongeni work is controversial because the Kenya Railways Corporation (KRC) claims that it owns the land and had not entered into a lease agreement with KPA after negotiations collapsed.
To date, the ownership of the plot is still vested in the railway. Investigators have termed this as “wastage of public resources”, saying Dr Manduku and other senior officers should take responsibility.
Dr Manduku is yet to explain why KPC moved ahead to develop a plot it didn’t own.
The matter is made more complex because KRC is now demanding KPA vacate its plot and restore the uprooted railway line, meaning that KPA cannot use the facility even after sinking Sh500 million into it.
The Treasury, in its letter about the case dated November 22, 2019, describes the entire procurement as unprocedural.
“As per the Public Procurement and Disposal Act 2015, procurement should not take place before budgetary approval. KPA is required to comply with this legal requirement.”
Treasury has also waded into the Kisumu port procurement saga and now says that it only approved Sh100 million for the Kisumu revitalisation works for the 2018/19 financial year.
Already, works with a total contract sum of Sh803 million has been awarded for the Kisumu project.
Records also indicate that for the 2019/20 financial year, the project had been allocated Sh500 million but this had not been approved.
In the investigation report, detectives say that “despite the knowledge that only Sh100 million was available for the Kisumu works, the managing director authorised expenditures amounting to Sh803 million which indicates that he engaged without an approved budget.”
Dr Manduku had told investigators that he had received a presidential directive to fast-track the Kisumu works, but according to investigators, “he was unable to explain as to whether the said directive directed him to overlook procurement procedures”.
In his letter to investigators, the Treasury PS says that KPA should have sought approval “if the total contract price exceeded 25 per cent in compliance with Section 139 of Public Procurement and Disposal Act, 2015. The National Treasury did not receive any request for variation of this project.”
Besides Dr Manduku, others on the radar of detectives include General Manager for Operations William Rutto, Senior Works Officer Anthony Muhanji, Principal Civil Engineer Bernard Nyobange, and Works Officer Juma Chigulu.
KPA has for years been a citadel of cartels and, with the billions of shillings left at its disposal, it has been a playground for politicos and rent-seekers.