Why disclosure failure will cost firms heavily
Attorney-General Kihara Kariuki who unveiled fresh regulations that will compel PPRA to reveal information on beneficial owners of firms that have secured tenders in state-backed entities.
The government will blacklist companies, which fail to disclose names, residential addresses, and occupation of secret shareholders when they clinch state tenders.
The Public Procurement Regulatory Authority (PPRA) has published a new tender template requiring firms that bag government jobs to disclose beneficial company ownership information in a form.
The form says failure to disclose the information would amount to refusal of the contract by a successful entity punishable by debarment from future State tendering process under Section 41(1) (e) of the Public Procurement and Asset Disposal Act, 2015. Kenya is reviewing tender processes to unmask shareholders of firms who secretly benefit from State deals through nominee accounts in efforts to boost transparency in public sector procurement.
The International Monetary Fund (IMF) has in the past also demanded disclosure of secret owners in companies awarded procurement contracts as a tool for fighting corruption.
“I fully understand that failure to furnish the procuring entity with the beneficial ownership information within the period provided for in the letter of award shall invalidate my award and may considered as refusal to enter into a written contract which is punishable under Section 41(1) (e) of the Public Procurement and Asset Disposal Act, 2015,” the PPRA template reads.
The procurement authority has published the new template after Attorney-General Kihara Kariuki unveiled fresh regulations that will compel the authority to reveal information on beneficial owners of firms that have secured tenders in state-backed entities.
Amendments
Mr Kariuki made amendments to the previous regulations, which required that information on beneficial owners — investors who own more than 10 per cent stakes in companies through secret accounts —be made available to the Kenya Revenue Authority (KRA), security agencies, and the Financial Reporting Centre, which tracks illicit wealth.
Kenya in October 2020 started collecting personal data on beneficial owners, including their names, KRA PIN, national ID or passport copies, postal address, residential address, occupation, and telephone numbers.
This information will now be made public through a portal manned by PPRA — the State procurement regulator —for firms that have secured tenders in government and parastatals.
The government has been posting transactional level procurement data at the public procurement information portal (PPIP) but the World Bank wants a more granular level of detail.
World Bank in the Kenya Public Expenditure Review 2020 said the PPIP was not up to date showing tenders valued at Sh179bn, which was only one-third of total procurement spending.
