Impunity reigned at IEBC in tenders scam whose 'theft was beyond the imaginable'
What you need to know:
The tenders were inflated or duplicated and materials arrived long after the elections.
There were firms that enjoyed inexplicable privilege from the outset while almost all financial deals had whiff of fraud.
Apart from the controversy-strewn contracts for KIEMS and ballot papers, almost all other financial deals had a tint of fraud.
The Independent Electoral and Boundaries Commission went flat out to award contracts to certain firms, against all legal and regulatory challenges, to the loss of the taxpayer.
IEBC also bought some items at three times the market rate even as it paid for materials that were delivered long after the 2017 election had ended.
Besides Safran which enjoyed inexplicable privilege, IEBC — against myriad court cases and petitions to the procurement regulatory authority — went flat out to ensure Al Ghurair Printing and Publishing LLC, a Dubai-based company which the Opposition linked to the Jubilee candidate, printed and delivered ballot papers.
“Engagement of Al Ghurair was wrought with litigation and the commission position was manifest all through in the defence of the company. In fact, IEBC didn’t provide room for alternative. It was fixated on this company,” says an insider.
A South African company interested in the contract had its offer in dead water. Ren-Form CC, proposed to print and deliver presidential ballot papers in less than a fortnight, if contracted.
“For delivery to (Jomo Kenyatta International Airport) by not later than August 2, 2017 provided production starts by July 21,” Jean-Pierre du Sart, its sales director wrote back to IEBC on July 14, 2017.
The presidential papers for the General Election arrived on August 1, 2017. Implicitly, IEBC wasn’t time-strapped as it claimed to justify the contract award to Al Ghurair.
The offer followed a plenary resolution that an alternative international company be identified to procure the ballots in line with a court judgment that almost disrupted IEBC’s plan to award Al Ghurair. The Court annulled the contract on the basis that IEBC failed to conduct the statutory public participation.
Instructively, Ren Form CC isn’t a run-of-the-mill company; it has supplied ballots in 22 African countries, including Zambia on three occasions before losing out to Al Ghurair in the August 2016 elections.
Thus, it was plainly fallacious for the IEBC to claim that it was time-strapped and that alternative suppliers lacked the technical capability. As it turned out, IEBC reached out to Ren Form CC as a matter of procedure.
Notably, Al Ghurair printed an extra 1.2 million (instead of the 196,115 agreed at the Plenary) presidential ballots in controversial circumstances, a matter that further complicated the already strained relations between Chebukati and Chiloba.
On August 1, 2017 — just a week to election — Chebukati asked Chiloba to explain “who gave (him) authority to print excess of 1.2 million instead of 196,115 ballot papers (1 per cent of the total requisition).
The one percent was to cater for spoilt ballots and “adverse circumstances “as well as reduce the risk of mismanagement of ballot papers”.
In his response, Chiloba agreed that plenary had resolved that, indeed, one percent extra ballots were to be printed but the number was to be “rounded off to the nearest 50”. How IEBC resolved this isn't known, for the matter appeared to have ended with Chiloba’s response.
However, according to the Auditor General, “verification undertaken in 35 sampled counties across the country there were falsification of records on issued ballot papers maintained at IEBC warehouse in Nairobi compared with actual receipts in the field resulting in a variance of 2,534,904 ballot papers which have not been accounted for”.
The Al Ghurair contract was signed just days after IEBC’s then head of procurement Lawy Aura was sent packing “with immediate effect” for declining to give a favourable opinion on the proposed award to Ghurair, according to sources.
At the end, the contract for printing of ballot papers went through open tender, restricted tender then direct procurement. Al Ghurair survived this bizarre process.
Apart from the controversy-strewn contracts for KIEMS and ballot papers, almost all other financial deals had a tint of fraud. The acquisition of data bundles can only pass for a spending binge.
IEBC acquired Sh127.6 million worth of data bundles (149,640GB or 149TB) from Safaricom, Telkom and Airtel. Yet when the Auditor General analysed Internet use on the SIM cards, only 605.3GB of bundles worth Sh515,269 had been used — a mere 0.4 per cent of the acquisition.
It’s incomprehensible that IEBC didn’t enter into a postpaid arrangement with the telcos. Either elements in the secretariat were out to make a fast kill or an extravagant IEBC failed to pre-quantify the amount of data required before issuing the contract. Consequently, Sh127.08 million went to waste or was misappropriated.
But more confounding is a case where IEBC cloned contracts — a situation that resulted in the loss of billions of shillings.
The work was replicated, given different titles and then awarded separately yet the goods and services involved could have been performed by a single supplier.
Perhaps IEBC would argue that it sought to spread risks. But in real sense, the Commission did this to benefit multiple vendors, some with close ties with Jubilee honchos.
Duplication was also to create confusion and thus abet electoral fraud. “A single supplier will take care of failures. There won’t be any fighting and confusion. The norm is to give it to one company,” said an IT vendor for key national ministries.
IBM was to provide IBM server infrastructure and KIEMS security monitoring solution. Africa Neurotech was to supply and implement IEBC primary and secondary data centre, Oracle Kenya was to provide the Oracle database and security solution while Telkom Kenya was to offer co-location services for data centre and disaster recovery site.
TERMS OF REFERENCE
The IBM infrastructure contract awarded on July 17, 2017 and scheduled to run through to June 2018, was given out for Sh425 million yet the evaluation committee had recommended that it be procured at Sh75 million.
The contract involved supply and delivery of vulnerability and event management services, cyber security operations centre, web application and next general firewalls, anti-distributed denial of service solution, e-mail security and licences, network discovery and compliance solution, and one-year hardware warranty and technical support.
The contract for the provision of Oracle database and security solution, which also comprised the review and assessment of the election technology, was awarded to Oracle Technology Systems (Kenya) Ltd via direct procurement. It was controversial.
First, Oracle itself reportedly drew the terms of reference (ToRs). Second, there was no contract between the Commission and this vendor. Instead, there were signed ordering documents. Third, the KPMG audit of the voter register had already identified the inherent security lapses in the IEBC technology and had suggested solutions.
Fourth, the Commission’s ICT department had requisitioned purchase of Oracle database solutions and licences at Sh80 million but it was awarded for Sh273 million.
Yet, despite the inflated cost, Oracle partially delivered — it conducted one training instead of six. Database Vault, Real Application Cluster (that enables sharing of resources in form of cloud architecture) and training were “not complete”, according to audits.
IEBC contracted Africa Neurotech Systems Ltd to supply, install, implement, and commission and support its primary and secondary data centre equipment. It was paid Sh249.3 million against contract budget of Sh130 million. But according to the Auditor General, the Commission “paid the vendor before testing and commissioning the equipment”. The data centre wasn’t ready at the time of August Election.
Neurotech Systems Ltd is owned by Dan Kinyua Njuguna. A multimillion-shilling company with a presence in five African countries, it is intriguingly classified by the Public Procurement Oversight Authority (PPOA) among “disadvantaged” SME companies — those earmarked for Affirmative Action.
Despite non-compliance, IEBC still engaged Neurotech — through direct procurement — to supply and deliver storage expansion for the converged infrastructure, at a cost of Sh165.7 million.
Sh165.7 million was paid against a user requisition of Sh124 million. The equipment was delivered on January 9, 2018 — well after the FPE. In the end, IEBC paid Neurotech Sh415 million for facilities never used during the two elections.
As regards Telkom, it wasn’t among those pre-qualified for the tender (co-location services for data centre and disaster recovery site). However, in unclear terms, IEBC’s evaluation committee recommended it be awarded the contract, which was inexplicably overvalued by Sh4.92 million.
Once it became apparent that these companies had defaulted on their contracts, IEBC and Safran went into panic mode. The French company wrote to the Commission to be allowed to use Japan’s Nippon Telegraph and Telephone Corporation (NTT) cloud services. The Commissioner would later accept the offer, even without a contract between the two, in a letter dated July 28, 2017.
Notably, the country went into the election without a backup server. IEBC didn’t have any data recovery infrastructure. And this partly explains why it couldn’t respond to Nasa’s demand to access the server. Nonetheless, IT experts question why IEBC dealt with NTT through Safran Identity yet the Japanese company has local representation — Dimension Data (which operates in Kenya as Dimension Data Kenya, Internet Solutions Kenya and Plessey Kenya).
“The Commission needs to justify contracting process for cloud services while at the same time incurs Sh1,002,813,667.97 on similar services that were never utilised,” says the Auditor General.
Our investigations reveal that IEBC awarded contract for cloud services despite an advisory by the Communication Authority of Kenya against the use of private servers. The Authority, in response to the commission’s proposal to use a private cloud server to supplement its primary and secondary disaster recovery sites, warned that sensitive data couldn’t be placed in private hands.
Intriguingly, the cost for cloud services during FPE was Sh50.7 million more than during the General Elections.
On June 20, 2017, the then IT chief Chris Msando presented a paper on the transmission of results for the August elections in which he indicated that some polling stations were out of the 3G and 4G network coverage required for KEMS transmission of results. An analysis found 11,115 stations reportedly outside the network coverage.
To cover this, IEBC proposed 1,000 and 1500 satellite units (at cost of Sh550 million and Sh825 million respectively) to be used in results from outside the requisite network. The first batch of Airtel’s 1,000 Thuraya data modems and SIM cards were distributed to constituencies before the August 8 elections.
However, in the end, only 339 modems and SIM cards with 4GB were used. The rest, according to IEBC internal audit, were delivered on August 24, 2017, way after the polls — although the Auditor General says that they were in fact supplied much later on October 5, 2017.
Yet, despite this, IEBC still went ahead to give out another contract for 1,000 units for FPE and which were received in January 2018. The Commission appeared not interested in the devices it had procured for the August polls or the unused 600. At the end, owing to delay in delivery, IEBC “reactivated and reused” the devices, according to Auditor General.
That apart, a ballot box that cost Sh1,800 during the August election was later procured at Sh2,500 for the FPE. This was in spite of the similarity in specifications and same supplier. Thus IEBC lost Sh27.9 million (from purchase of 42,927 boxes) in inflated costing.
Mini Mix Agencies was on March 3, 2017 awarded the Sh19.5 million contract to supply and deliver 3,696,000 security seals at unit price of Sh5.30. However, it delivered just 2,001,600 units on July 22, 2017. The rest, 1,694,400 seals, were supplied on October 19, 2017 — more than 2 months after the election. Yet IEBC didn’t terminate the contract even after the supplier had stalled.
Instead, the commission rushed to contract Ramaas Supplies Ltd, through direct procurement, for 500,000 seals at Sh24.5 million (at Sh49 a unit) to mitigate the shortfall. Instructively, this company had failed at the preliminary evaluation stage during the tender process, having quoted Sh18.10 a unit.
High Court Judge Pauline Nyamweya last October ruled that the Sh350 million contract to provide “strategic communication and integrated media campaign services” was irregular. The Secretariat had deviated from plenary resolution and inexplicably hired Scanad.
All said, “election 2017 was a swindle,” according to a member of the now-defunct Interim Independent Electoral Commission. “The theft was beyond the imaginable.”