The contractor in the scandal-ridden Kimwarer and Arror dams project changed its names and made it hard to know which company Kerio Valley Development Authority (KVDA) was dealing with, the Director of Public Prosecution Noordin Haji has revealed.
In a case implicating former Treasury Cabinet Secretary Henry Rotich, Haji says the contractor, CMC Di Ravenna, changed names three times.
He says lack of documentation on how the tendering process was done and failure to involve the National Land Commission and Kenya Forest Service, meant taxpayers would fund a ghost project.
“The criminal case involves colossal sums of public funds that were lost and a burden that the Government of Kenya through the taxpayers continues to facilitate for non-existent projects due to lack of due diligence,” Haji said.
In a 578-page reply to Rotich, the DPP argued that while the bidder was CMC Ravenna-Societa Cooperativa incorporated in Italy, the firm which was awarded the tender was CMC Di Ravenna and Aecom South Africa.
He says although the firm which was issued with the letter of award was CMC Di Ravenna South Africa and the contract was signed by a joint venture of CMC Di Ravenna and Itenera JV Kenya Branch, payments were made to CMC Di Ravenna-Itinera JV at Intesa Sanpaolo SPA Bank in London.
The DPP says that at the time the contracts were executed, CMC Di Ravenna-Itenera JV was a ghost company as it had not been registered.
Unnecessary and illegal
“The impunity with which the tender proceedings were dealt with and breaches of the law led to the ridiculous result.
“The impunity did not stop there as at the time the contracts were executed with them, CMC Di Ravenna-Itenera was not yet formed or registered and did not legally exist at all,” Haji’s reply reads in part.
At the same time, Haji argues that although another Italian firm, Itenere Spa of Italy cropped up, it was not mentioned in the tendering documents, adding that there is no information or data on the firm.
Haji also questions how Kenya ended up being the borrower as the tendering documents indicate that it was the successful bidder who ought to source for finances.
The document says that the loan to build the two dams and the payments which were made were unnecessary as CMC and KVDA had not even drawn the designs.
“The loans, the drawdowns, and the payment of funds were very premature, unnecessary, and illegal,” he says, adding that Rotich ignored offers from India and Iran, both of which had expressed interest to directly finance the project.
Haji argues that Rotich went for a commercial loan without the approval of Parliament instead of a grant by India and Iran which was much cheaper. As a result, he says, the country’s debt-ceiling burst.
But in court documents, Rotich says the debt-ceiling and the two projects had the green light from the Cabinet.
At the same time, the contract Kenya signed with Italian insurer SACE to secure projects tied the government’s hands in finding cheaper loans as it dictated that it could not sign any of its rights other than in accordance with the terms of the contract and with the consent of the agent.
Kenya could also not change the terms of the contract unless SACE gave consent and Treasury was to ensure that money payable to the Italian firm was in the budget until it was settled in full.
“From the evidence available, the CS Finance acted irresponsibly, in a rush and or negligently when he also gave the contractual right to SACE and the facilities had the exclusive right to work out the terms of the financial guarantee offered, including the right to recalculate the premium charged,” court documents filed on Thursday read.
Haji accuses Rotich of inflating the prices of Kimwarer and Arror dams, adding that he could not explain how he concluded that CMC Di Ravenna was the best company to carry out the project.
According to the DPP, although the Italian firm was folding up, there was no proof that the minister had done due diligence and failed to engage foreign registries and accounts to ascertain that the firm was capable of doing the work.
The State believes Rotich has a case to answer for his actions or inactions.
In his filings, Rotich says he had no role in the procurement process and had no powers to direct Environment ministry or KVDA on what to do.
In his case, the former CS alleges that the Ethics and Anti-Corruption Commission (EACC) and the Office of the Director of Prosecution (ODPP) were aware of former Environment CS Judy Wakhungu’s letter dated March 14, 2016, which informed Treasury that KVDA directors had approved Kimwarer and Arror dams development and identified a contractor and a source of the finances.
The two being Vision 2030 projects, he claims, the former CS requested Treasury to review the proposed financing and borrow funds to finance the projects.
Not responsible officer
“I am not the accounting officer or employee of the procuring entity, KVDA, or the parent ministry.
“Furthermore, the Ministry of Environment, Natural Resources and Regional Development Authorities in their letter dated March 14, 2016, stated that the board of directors of KVDA approved the development of Kimwawer and Arror multipurpose dams,” he says.
He adds: “It is not the mandate of the Cabinet Secretary of the National Treasury to supervise or micromanage procurement proceedings in government entities.
“Legal issues arising therefrom are the responsibility of the procuring entities and their officers. I was not such an officer responsible for the procurement matters of the entity in question.”
Rotich says being a flagship project, the projects must have been passed by the Cabinet which is headed by the president.
He accuses the State of causing the cloud that is hovering over his head for doing his job.
According to court papers, he was required by law to sign all financing agreements on behalf of the government upon issuance of clearance by the Attorney General.
CMC Di Ravena also went to court, pointing an accusing finger at government agencies, saying they failed to secure the land where the project was to be undertaken despite an undertaking that everything had been sorted out for it to start working.
The firm now says KVDA and the National Land Commission should answer to Kenyans for the loss of Sh63 billion and failed projects.
“KVDA and National Land Commission materially impeded the progress of the Arror and Kimwarer dam projects by failing to acquire the necessary land timely, rendering onsite work impossible. It was therefore impossible to accomplish the work on dam sites,” it said.
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