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In this issue: Minister of Labour on collection of trade union dues, KACC’s latest quarterly report, including some interesting investigations into allegations of wrongdoings at the Ministry of Health, the Kenya Sugar Board, the Lake Basin Development Authority, the Prisons Department’s Nairobi Remand and Allocation Prison, Zep Re, and Ministry of Energy and Kenya Pipeline Corporation.
Minister of Labour: Collection of Trade Union Dues
The Minister for Labour, John Munyes, has ordered every employer of more than five members of the Banking, Insurance and Finance Union (Kenya) to deduct every month 1% of their employees basic salary subject to a minimum of KES250 and a maximum of KES600 from the basic wages of each employee per month.
He has also ordered the employees to pay within ten days of the deduction, the total sums deducted by closed cheque to the Banking, Insurance and Finance Union into the union’s account number 0102074144800 at the Standard Charted Bank Harambee Avenue Branch and to pay within ten days of the date of deduction, KES50 from the wages of each employee and pay the total sums deducted by crossed cheque made payable to the Central Organisation of Trade Unions (Kenya) into the organisation’s Account number 1407927 at Barclays Bank of Kenya Limited, Queensway Branch in Nairobi.
Every employee should notify the trade union and the organisation in writing and within one month of the payment and to make written returns to the Registrar of Trade Unions within one month of making all the payments.
Kenya Anti Corruption Commission
The Kenya Anti Corruption Commission (KACC) has released its quarterly report for the period covering the fourth quarter of the year 2008, 1 October 2008 to 31 December 2008.
The total number of files forwarded to the Attorney General for the period where 37, with 26 of the files recommended for prosecution. The Attorney General accepted to prosecute 21 of the files, with 16 currently in court. Nine files are awaiting the Attorney General’s action.
Some of the high-profile cases include an inquiry into allegations of procurement irregularities at the Ministry of Health involving procurement officials and private suppliers. Investigations covered five tenders for the supply of pharmaceuticals, medical equipments and non-pharmaceutical items. The evidence gathered disclosed that in three of the tenders request for the supply of start-up drugs, purchase of x-ray mobile units and the purchase of various theater items were selectively issued to companies in which a certain doctor was either the principal shareholder or otherwise closely associated with them. In particular, in the tender for the start-up drugs, it was established that documents of tender were purportedly issued to a mix of existing and non existing international companies as interested bidders.
On the part of the existing companies, it was confirmed that the companies were unaware that tenders and bid documents were submitted on their behalf bearing signatures and rubber stamps of non existent company officials, bank officials, and witnessed by non-existent advocates and accountants. In this case the award for supply of start up drugs was made to one of the companies at the tender price of KES28.7m.
In the tender for the purchase of various theatre items, awards for the items being procured were made to four companies associated with the doctor in the total sum of KES59.6m. In this instance, documents of incorporation belonging to registered local companies were used in support of bids submitted to stage manage competition without their knowledge and consent. It was confirmed that the doctor is the controlling share holder and sole signatory to the accounts of all the companies awarded the tender.
In the request for x-ray machines, an award in the tender price of KES18.4m was made to a non-existing company. Investigations confirmed that a cheque issued by the Ministry of Health in settlement of the bid price was deposited in the account of the said company, a firm with no known offices or any other form of physical address. It was also verified that, though not a signatory to the account, the doctor instructed the bank to transfer the funds to the account of another of his companies.
In the tender for purchase of non-pharmaceuticals, it was ascertained that officers of the Ministry of Health’s Technical Committee had evaluated and recommended seven bidders’ samples as acceptable. However, the summary technical evaluation report prepared after decoding of samples and presented to the Ministerial Tender Committee indicated that only one tenderer’s sample, whose principal shareholder was the doctor, was evaluated as being acceptable. Consequently, the contract to supply the goods was awarded to the doctors company at KES40.3m. The same company was awarded the tender for purchase of medical equipment at KES123.4m. However, tender documents obtained from the Procurement Department of the said ministry indicated that the tender document for one of the most eligible bidders was mutilated. The same was evaluated as lacking a brochure for x-ray machines.
The file was forwarded to the Attorney General’s office on 18 December 2008 with recommendations that procurement officers at the ministry be charged for involvement in fraudulent dealings with the doctor. The Attorney General’s advice is yet to come.
Inquiry into allegations that a former chief executive officer of the Kenya Sugar Board with the complicity of the legal officer was engaged in corrupt dealings with regard to the outsourcing of legal services. It was alleged that despite the existence of three law firms on the Kenya Sugar Board panel, the chief executive officer gave legal work to only one firm of advocates. As a result, the said law firm benefited in terms of legal fees in excess of KES100m.
The investigation established that though the procurement of the services of the advocates was sanctioned by the tender committee, there was some element of neglect of duty by the two suspects in their handling of the fee note for KES26m that was presented by the firm of advocates. In consequence therefore, the Kenya Sugar Board incurred expenses in challenging a suit and to ward off an attachment and sale of its goods.
The file was forwarded to the Attorney General’s office on 2 October 2008 with a recommendation that appropriate administrative action be taken by the Kenya Sugar Board against the chief executive officer and the legal officer of the board. The Attorney General’s advice is pending.
There was also inquiry into allegations of abuse of office against the management of the Lake Basin Development Authority (LBDA). It had been alleged that certain advocates acting in concert with the past management of the LBDA fraudulently and without authority executed and recorded a consent order in court requiring the LBDA to pay a firm of consulting engineers the sum of KES80m. Investigations revealed a number of shady dealings through which the LBDA lost large sums of money. The conspiracy to defraud LBDA involved a number of individuals both within and without the Authority.
The file was forwarded to the Attorney General’s office on 22 October 2008 with recommendations to charge two advocates involved in the transaction, two directors of the consulting engineering firm and the LBDA’s managing director be charged with various offences of conspiracy to defraud and fraudulent attempt to dispose of public property. It was further recommended that a sum of KES200,000 improperly paid to an advocate be recovered through civil action and the advocates involved in the transaction be referred to the Law Society of Kenya’s disciplinary committee for disciplinary action. The file was returned by the Ag with instructions that further investigations be undertaken. KACC is still investigating the issue.
The KACC is also looking into allegations of abuse of office against the officials of the Prisons Department’s Nairobi Remand and Allocation Prison (NRAP) in that they misappropriated KES40m meant for the construction of staff houses. The investigation revealed various instances where the procurement procedures set out in the Exchequer and Audit (Public Procurement) Regulations, 2001 were not followed by NRAP officers when procuring building materials for the staff houses. This was by verbally instructing suppliers to deliver goods in total disregard to competitive bidding and even where there was competitive bidding, failing to issue local purchase orders as recurred by the law.
The file was forwarded to the Attorney General’s office on 22 December, 2008 with recommendations that the officer in charge of prison and the procurement officer of NRAP be charged with various counts of failure to comply with the law relating to procurement contrary to the law. The Attorney General’s advice is awaited.
Inquiry into an allegation that part of the sum of KES242m paid by Zep-Re (PTA Reinsurance Co) for the purchase of United Insurance Towers to Kenya Reinsurance Corporation Ltd, to the tune of KES7.3m was misappropriated by the former managing director in collusion with the managing partner of a law firm that had been instructed to handle the transaction in the guise that it was payment made to agents employed in the sale transaction. The investigation confirmed the misappropriation as there were no agents involved in the transactions.
The file was forwarded to the Attorney General’s office on 22 October 2008 with a recommendation that the former managing director of Kenya Re and the lawyer be prosecuted for fraudulent acquisition of public property under the Anti Corruption and Economic Crimes Act. The recommendation was accepted.
There were also inquiry into allegations of abuse of office against a former Minister for Energy, the Managing Director of Kenya Pipeline Corporation (KPC) and the Chief Security Officer at KPC. The allegations were that the former minister used his influence at the ministry to secure the award of a tender to a security firm for the provision of security services to KPC premises in Lamu, Kipevu and Miritini in Coast Province. KPC was a parastatal that fell within the minister’s docket. A further allegation was that the minister’s father had been receiving a monthly commission from the security firm through an account at a bank located along Nyerere Road, Nairobi, for onward transmission to the minister. The investigation established that the role played by the minister in influencing the tender award in favour of the security firm, if any, was not documented and no witness made any allegation of existence of the same. There was no tangible evidence that the payments that the minister’s father received were commission payments directed to the minister from the security firm. The case was recommended for closure and the Attorney General accepted the recommendation.
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