Sh6 billion looted in bogus water contracts

Hezron Njoroge | NATION Water minister Charity Ngilu when she appeared before the Parliamentary Select Committee on Lands and Natural Resources last week following claims of misuse of funds in drilling of boreholes in different parts of the country. 

By  ALPHONCE SHIUNDU ashiundu@ke.nationmedia.com
Posted Monday, March 21 2011 at 22:00

In Summary

• Extent of colossal swindling of public funds in Ministry of Water exposed in two State audit reports

The extent of the colossal swindling of public funds in the Ministry of Water and Irrigation has been exposed in two government audit reports.

The theft of taxpayer money was hatched in extensive schemes right from the tendering, where in one instance, the cost of a dam was increased by Sh1 billion before the tender was awarded to a rookie contractor, who according to the law, should not handle works valued at more than Sh150 million.

The audit reports prepared by the Treasury and the Kenya National Audit Office show that up to Sh5.96 billion, disbursed to the National Water Conservation and Pipeline Conservation — a rogue parastatal in the ministry — for the construction of five dams, can’t be accounted for. The disbursement has been going on for the last three financial years.

Evidence galore

The irony of it all is that plans for the dams had previously been put on ice because the money wasn’t available.

Now, with the money available, there’s evidence galore, from none other than the Treasury, the ultimate custodian of public funds, that the money is being embezzled by well-connected cartels working together with officials in the NWCPC and Tanathi Water Services Board.

Though the auditors said they did not get sufficient documents, it is possible that they may not be able to get some of the documents, because of the September 2009 fire that razed the corporation’s offices in Industrial Area.

The remaining documents are with the Kenya Anti-Corruption Commission.

But even without comprehensive documentation, the Auditor-General and the Treasury have been able to piece together a mind-boggling scam that is certainly among the biggest scandals in the coalition government.

The audit reveals an organised plan to rip-off the government, including Sh328 million shady pending bills, irregular contracts worth Sh112 million, and ghost procurement worth Sh60 million, where goods like water pipes, water meters and plastic storage tanks are recorded as bought but never delivered.

The Kenya Revenue Authority also lost Sh54.8 million in a ploy where despite the taxes having been deducted from payments to merchants, the money was never remitted to the taxman, but was diverted to “other uses”.

Still, the auditors allude to a blatant theft of items from the corporation’s stores. The items are valued at Sh27 million. The officers also pocketed Sh6 million in imprest triggering queries that the money could have been used for “non official purposes”.

In Kiserian Dam, the auditors noted, the corporation chose a bid that was Sh170 million above the tender of Sh819 million and gave the contract to Lee Construction Limited.

Midroc Drilling Company Ltd had placed a bid for Sh653 million but its bid was not considered “apparently because the firm lacked capacity and experience in construction of large dams”.

But it has now emerged that this was just an excuse to lock out Midroc because the same tendering committee that had locked it out of Kiserian handed it the Sh2.4 billion-tender to build Badasa Dam in Marsabit.

Even though by now the dam at Kiserian should be completed and serving the people of Kiserian, Ngong and Ongata Rongai, the dam is not yet done. It should have been completed by January 5, 2011.

The auditor makes a shocking revelation that in Badasa Dam, a tender of Sh1.4 billion was awarded to Frabo and Company Limited in June 2008. However, the Public Procurement and Review Board noted “various irregularities in the procurement process” and thus nullified the tender.

Six months later, re-tendering was done at a cost of Sh2.4 billion, and Midroc Water Drilling Company Limited won the tender.

“No reason has been provided for the very substantial increase in bid figures following the re-tendering of the project,” the Auditor-General notes in his report. The audit recommends a closer scrutiny of the Bill of Quantities to be sure that the public was not conned.

The auditor also mentions an “anomaly” in which the lowest bidder was not considered because he had already won two bids in Maruba Dam in Machakos and Koibatek’s Chemususu Dam.

“As a result of not awarding the tender to the lowest bidder, NWCPC lost Sh46,939,041,” the audit reads.

Badasa Dam was scheduled to becompleted in December this year, but as of November last year, 16 months after the works began, only a third of the work was completed. And despite being behind schedule, the government had paid Sh1.15 billion — half the contract sum.

The auditors also failed to trace Sh208 million said to have been paid to consultants supervising the works at the dam.

“The money does not appear to have been paid in a deposit or any other appropriate account as required by the Government Financial Regulations and Procedures,” the audit notes.

Since last September work has stalled, and when the auditors queried this, they note in their report that “no satisfactory explanation” was given.

With the biting drought in Marsabit, where even the desert-engineered camels are dying and people depend on five 20-litre jerricans every fortnight from humanitarian bodies, the promise of water from the dam is likely to remain a mirage.