How IEBC lost Sh9 billion in irregular tenders - Daily Nation

IEBC: Anatomy of a cash cow with serial abortions and indiscretions

Sunday December 16 2018

IEBC

IEBC officials train clerks on how to use the Kenya Integrated Elections Management System (KIEMS) kits in October 2017. The commission bent all rules in the procurement book to allow Safran, who delivered the Kiems kit, and Al Ghurair, who supplied ballot papers, to influence the 2017 elections. PHOTO | JOHN NJOROGE | NATION MEDIA GROUP 

By KEN OPALA
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The 2017 election was designed more as a cash cow than a process to midwife the next crop of leaders.

The Independent Electoral and Boundaries Commission (IEBC) conduct from procurement of goods and services to electronic transfer of results, appeared designed to covertly sabotage the people’s will.

Multiple interviews and audit reports unravel an electoral agency allergic to ethics and laws of procurement. It deliberately failed to publicise requisite information for fairness, competition, equitability, cost-effectiveness, and transparency among bidders.

“The bottom line is that there was lack of transparency in all the processes and this exacerbated the lack of trust,” according to Mr John Githongo, former permanent secretary for Ethics and Good Governance. And this raises questions about the shadowy intersection of politics, finance and corruption in last year’s elections.

At Sh2,540 per registered voter, the cost of the 2017 elections was 300 per cent higher than in 2013. The global benchmark is Sh500 a voter.

SH3.9 BILLION

Ghanaians paid the equivalent of Sh70 in their 2016 election. Tanzania spent Sh516 a voter; Uganda Sh400 (in 2016), and Rwanda last year (Sh171). Only Papua Guinea’s vote is more expensive than Kenya’s, at Sh6,300.

Now IEBC is in Sh3.9 billion debt, having lost Sh9 billion in irregular award of contracts. Sh12.2 billion worth of contracts were not supported by the obligatory performance security bond.

Direct procurement of goods and services worth Sh9.23 billion benefited favoured suppliers.

“The reason elections (are) expensive in Kenya is because of gymnastics in the acquisition of goods and services,” notes Dr Othieno Nyanjom, an international consultant on development matters. “Impunity fuels costs. Definitely, Kenya is ridiculously expensive.” An IEBC manager also told of how contracts were calculated to easily attract litigation, and to justify delays in favour of preferred vendors.

To circumvent its own processes, IEBC “caused an intentional delay through discriminatory issuance of bid documents and ambiguity of the award criteria resulting in the award of contract being challenged and nullified by the Procurement Administrative Review Board or courts”, says the Auditor-General.

DIRECT PROCUREMENT

It then rushed to blame the Exchequer for delays in procurement, yet according to the Auditor-General, Treasury released funds between July 2016 and June 2017 “therefore, there is no justification for use of direct procurement due to inefficiency of funds”.

Acquisition of technology and supply of ballot papers were the keystone contracts, comprising about 30 per cent of the cost of the 2017 election. Naturally, they were the most abused.

French company Safran Identity and Security (SIS) delivered the Kenya Integrated Election Management System (Kiems) while Al Ghurair of Dubai supplied ballot papers. These vendors aren’t spectacular. But IEBC bent all rules in the procurement form book to allow them influence the 2017 elections.

According to a key source within IEBC, the engagement of Al Ghurair was wrought with litigation and the commission position was manifest all through in its defence. “They didn’t provide room for alternatives. The same was with SIS. Anybody would question why IEBC was bent on awarding the contracts to the two (firms),” an IEBC insider said.

BEDROCK CONTRACTS

Instructively, as early as November 2016, the secretariat had already settled on Safran and Al Ghurair as suppliers for the bedrock contracts. By the time they were eventually contracted, somewhere between March 2017 and May 2017, IEBC had fiercely fought off all efforts to deny the two vendors.

Our investigations revealed an uncanny IEBC-Safran liaison. The commission unwaveringly ensured the French company acquired the requisite electoral technology-related infrastructure despite the Opposition’s concerns.

Even a plenary (a meeting of commissioners) resolution in February to lease electronic voter identification devices (EVIDs) from an African country — as this outweighed upgrading the existing systems or procuring new ones in terms of time and cost — wasn’t implemented. The commissioners had asked the secretariat to “conduct a comparative costs analysis for the three options (upgrading, conversion, and/or leasing)”.

As usual, the secretariat claimed it was time-strapped. Hardly. It had plenty of time to lease the devices. If anything, Safran was awarded the Kiems contract on March 31, 2017.

HIRE KIEMS

It was the same story when, on March 15, 2017, the plenary directed the secretariat to “embark on the leasing option with immediate effect”. It was to hire Kiems “from a provider with the capacity to deliver” ahead of voter verification and the General Election.

Kiems replaced the Sh513.5 million Biometric System Vendor Support and Maintenance contract IEBC had awarded Safran in January 2016. The switch followed a resolution by the inter-parties parliamentary group to have an integrated system.

Again, the secretariat failed to effect this decision. Safran got the contract. IEBC argued that the intention was to build the commission’s capacity.

At a casual glance, this makes sense. Acquisition of new equipment is economical in the long run. It helps to build capacity. But in Kenya’s case, once a device is used, it is left to become archaic or malfunctioning. For the corrupt, declaring devices “obsolete or dysfunctional” and acquiring new ones is huge business.

The scent for new acquisition is always alluring to unscrupulous bureaucrats. According to the Report of the Joint Parliamentary Committee on Matters relating to the IEBC, only 8,000 of 15,000 BVR kits available since the 2013 elections were serviceable as at August 2016. Of the 34,600 EVIDs, only 22,500 were usable — and even in this case, their functionality wasn’t certain owing to a high failure rate.

MOST EXPENSIVE

Of 40,000 mobile phones, only 15,000 were available then.

That Kenya’s election is one of the most expensive in the world means that the devices are cheaper elsewhere, and thus economical to lease. Unfortunately, IEBC was fixated on Safran and “economic sense” wasn’t the first choice consideration. The cost-benefit analysis was put in the back burner.

“It’s a game of musical chairs (intended) to reward loyalty. Equipment is forced to be redundant, owing to an entrenched culture of mismanagement,” Dr Nyanjom notes.

Again, in unbridled pursuit of the French firm, the Secretariat stonewalled to a plenary resolution for a background check on SIS, M/S Smartmatic and M/S Gemalto ahead of awarding the KIEMS contract. The proposed due diligence was to inform decision on whom to prefer among the three.

However, this resolution was “not done comprehensively”, the internal audit indicates, although Chiloba recently claimed that due diligence was undertaken only that Chebukati and Commissioners Connie Nkatha Maina, Roselyne Akombe, and Ms Margaret Mwachanya voted against Gemalto. Dr Paul Kurgat, Abdi Guliye and Molu Boya favoured Smartmatic, he told the Public Accounts Committee.

VOTING TECHNOLOGY

Smartmatic, the world’s leading provider of voting technology, had no chance at all. Its core mission, “to stop voter fraud”, was obviously at variance with the position of the influential Fifth Column at IEBC. Last year, Smartmatic unmasked an attempt by Venezuelan authorities to steal elections.

It was charged with providing elections technology but when the government manipulated the results, it blew the whistle after detecting a difference of a million votes.

In the case of Gemalto, it accused IEBC of playing cards under the table, as it were. In a complaint it lodged with Kenya’s procurement regulatory agency against the award to Safran, the company claimed that the Commission was selective in the kind of information it provided bidders. Smartmatic and Gemalto had very remote chances of succeeding in a situation where things had already been pre-arranged.

But more telling was the Secretariat’s response to a resolution to engage USAid’s International Foundation for Electoral System (IFES) on the acquisition of the requisite Result Transmission System (RTS).

IFES, which procured the 2013 election servers, had made it known that this time it had earmarked Sh2 billion through its Kenya Electoral Assistance Programme (KEAP).

SUSPICIOUS FUNDING

The secretariat, as in the other cases, reportedly disregarded this decision. IEBC’s lack of enthusiasm can be explained. On Jamhuri Day 2016, President Uhuru Kenyatta had, without divulging details, spoken out against what he termed foreign countries’ attempt to influence Kenya’s elections through suspicious funding.

Exactly a week later, the NGO Coordination Board, then headed by Mr Fazul Mohamed, declared IFES illegal in Kenya and asked Central Bank to freeze its bank accounts.

Instructively, the IFES funding was to be a grant. Instead, IEBC awarded Safran the Sh4.19 billion Kiems contract against a budget of Sh3.8 billion. The Auditor General would later indicate an overpayment, contrary to the law.

Intriguingly, IEBC further paid Safran for the same goods and services during the FPE. The comparative costs for the August 8, 2017 election and the subsequent poll indicate huge over-pricing for the latter, despite it being just one election against the six during the General Election.

INFLATED COST

The difference was a mere Sh1.672 billion yet the August Election involved acquisition of 45,000 KIEMS and their configuration, training and logistics while (FPE) entailed the purchase of just 15,000 KIEMS.

But more disturbing, the cost of FPE election-day support of Sh443.8 million “was almost twice that of the General Election”, that’s Sh242.5 million, according to the audit.

In defence, IEBC argued that there was an increase in Safran technical personnel, from 94 during the General Election to 292 in the FPE, a position the Auditor General found wanting. In fact, not all the technical staff were deployed during the FPE and “in any case, elections did not take place in 21 constituencies”.

Despite the inflated cost, the glitches in the General Election also littered the FPE. In fact, the October 26 Election was a replica of — if not worse — than the August 8 General Election.

However, Safran couldn’t be held liable for non-compliance, for the contract of September 28, 2017, was without guarantee of compensation in case of non-execution. This is because the firm flatly declined to provide performance security bond for the huge undertaking.

BOND FUNDING

It argued that such a bond and a Letter of Credit (which it had) “serve the same purpose”.

(A bond is a specified amount of money to ensure work is performed to the contract standards. If poor, the recipient can request bond funding to be released to hire someone else to complete the work. Letter of Credit promises that payments will be made; it covers payment for a project).

Later, it emerged that Chiloba had discussed with Safran about the issue of performance security and agreed with the company’s position. He reasoned that at the time the contract was signed, Safran “had performed more than 60 per cent of the contract” in what he termed as a “high risk” venture.

Against this background, it would appear Safran was the master here; IEBC merely complied. “Retaining one company over a long time puts the organisation at the risk of compromise,” says Dr Nyanjom.

TOMORROW: How IEBC inflated contracts, duplicated tenders and paid for materials which were delivered long after the elections