Court to hear how Kenya Power chiefs hatched fraud plot

The trial of 14 people, among them former Kenya Power managing directors Ben Chumo and Ken Tarus began Monday, with the prosecution saying it will show how they hatched the plan to defraud the company.

In the opening statement before Senior Principal Magistrate Felix Kombo, Director of Public Prosecutions Senior Assistant Alexander Muteti said all the accused persons acted with the common intention of defrauding KP. He said they later tried to cover their tracks by filing a civil suit, which the company ended up paying for.

DUE DILIGENCE

Mr Muteti said due diligence on a contract between KP and Muwa Trading Company Ltd was not conducted properly, thus the power firm ended up with faulty transformers.

They were were kept lying at the yard for more than a year yet payments had been made.

He added that the former KP management team flouted the law on public procurement and thus members should be individually and jointly held to account.

The statement was objected by defence lawyers led by Moses Kurgat, Harrison Kinyanjui, Migos Ogamba, Kiraithe Wandugi and Assa Nyakundi, but Mr Kombo overruled them saying it does not prejudice the accused persons.

Mr Muteti said the prosecution will call a total of 45 witnesses.

MUWA REJECTED

The first witness to take to the stand was Mr Linus Murithi, who works at the Public Procurement Regulatory Authority (PPRA).

Mr Murithi said he was asked by the PPRA Director-General Morris Juma to carry out an analysis of the KP tender.

He said the request had been made by the Director of Criminal Investigations and after two months, they gave their report.

In the tender, KP engaged seven companies, among them Muwa, all of which were paid a cumulative sum of Sh6,126,172,986.

For Muwa, Mr Muteti said the contract was signed on August 3, 2012, but it was terminated on May 5, 2015, over alleged breach of terms.

The document said upon delivery of the transformers, the acceptance committee rejected some of them because they were faulty.

MUWA HELPED

Although there were no accompanying notes for the rejection, the faulty transformers were later accepted.

A company identified as Silchar Technologies later sought a waiver of the factory assessment test, which KP granted despite the concerns raised on the quality of the transformers.

The prosecution argues that the waiver was meant to aid Muwa to import transformers that did not meet technical specifications contained in the tender document.

According to the prosecution, some 327 transformers supplied by Muwa were found to be faulty and had to be repaired, and that KP did not benefit from the warranty despite the massive failure.

Upon the cancellation of the tender, Muwa sued KP but the suit, according to the prosecution, was compromised at the appellate stage, and hence the matter was settled out of court.

The prosecution alleges that details of the negotiations were not spelt out in the recording.

The prosecution further said the MDs, together with the general manager corporate and company secretary agreed to pay Sh11.3 million plus a further $326,554 on account of liquidated performance. KP was also compelled to pay another amount on accrued interest.

THE CLAIMS

The trial was adjourned in October after documents, including the Energy Regulatory Commission's original report on the procurement of faulty transformers, went missing.

The other accused include Beatrice Meso (former company secretary), Joshua Mutua (general manager, commercial services), Abubakar Swaleh (general manager, human resource and administration), Samuel Ndiirangu, (general manager, ICT).

The others are Stanley Mutwiri (general manager, infrastructure development), Benson Muriithi (general manager, network management), Peter Mwicigi (general manager, regional co-ordination) and John Ombui (head of supply chain).

They allegedly led to losses amounting to Sh408 million at KP by procuring substandard transformers.

The charges stated that they conspired to commit an economic crime on diverse dates between August 3, 2013 and June 12, 2018.

The court further heard that the senior Kenya Power managers helped the company to fraudulently acquire Sh202 million by supplying substandard transformers.

Also in court was James Njenga, a director of the company.

The accused denied these charges and that of abuse of office and failure to comply with procurement laws.

The hearing continues on Tuesday.