Interpol hunts Kenyan in Sh339m fraud case

The police have enlisted the help of Interpol to trace former Kenya Pipeline Company managing director Linus Cheruiyot who has left the country while facing a Sh339 million fraud case.

Dr Cheruiyot is believed to be in Texas, USA, with his family. 

Well-placed sources within the Attorney General’s office told the Nation last week: "We have contacted the Interpol (The International Police Organisation) to help us locate him and bring him back here to face trial because he has not complied fully with the terms of his bail."

There is information that Dr Cheruiyot may have disposed of some of his property, including a Nairobi petrol station near the Mater Hospital, before leaving the country early this year. The petrol station is now run by a former State House official.

Dr Cheruiyot, together with eight others, had been arrested and charged in February last year with conspiring to defraud Kenya Pipeline Company of Sh339,318,941.20 through a fraudulent computer tender deal.

He was charged together with two former Kenya Pipeline employees, Ms Helen Njue (former finance manager) and Mr Paul Njuguna Gituku (former projects manager). The other accused are directors of a city computer firm, Data Logistics Ltd, Mr Donald Kiboro Mwaura, Mr Peter Kihanya, Mr Joseph Njenga, Ms Elizabeth Mumbi and Ms Eunice Wangui. They all denied the charges and were set free on bonds of Sh10 million each.

Investigations by the Nation also reveal that even as the Interpol’s help was being sought to bring back Dr Cheruiyot, the CID was pursuing leads which may lead to more fraud charges. 

The investigators are probing a deal through which Kenya Pipeline lost a prime piece of land in Nairobi's Upper Hill area.

CID officers are trying to figure out under what circumstances the Kenya Pipeline management under Dr Cheruiyot exchanged the Upper Hill plot, valued at over Sh50 million, for a piece of land in Embakasi whose value was less than Sh10 million.

Kenya Pipeline had been allocated the Upper Hill plot, LR number 208/1077, measuring 11.5 acres, in 1988. At the time the commercial plot was valued at Sh37.5 million.

In late 2002, Dr Cheruiyot wrote to the Commissioner of Lands surrendering the undeveloped plot and asking that KPC be allocated an alternative piece of land in the Embakasi area. 

The Commissioner of Lands took back the Upper Hill plot and in exchange gave the company a plot listed as LR number 9042/693 in Embakasi. 

Shortly afterwards, the much more valuable plot in Upper Hill was allocated to private developers. 

A valuation carried out for the Embakasi plot – at Dr Cheruiyot’s request – for the purposes of the exchange had placed the plot’s value at Sh35 million. 

But both the new Kenya Pipeline management headed by former Rangwe MP Dr Shem Ochuodho and CID investigators are questioning the valuation. They believe that the value of the plot was grossly exaggerated to justify the state corporation surrendering the pricey Upper Hill plot which almost immediately went into private hands. 

The surrendered Upper Hill plot had its LR number changed to 209/12044 and was promptly registered in the name of Kenya RTF Limited. It was not immediately possible to establish who is behind this company, but the new KPC management was suspicious and called in the CID. 

Sources at the CID say that the investigations into the Upper Hill land deal will establish why and on what consideration Kenya Pipeline exchanged a prime plot for one whose value was several times lower.

They will also look into whether the speedy re-allocation of the Upper Hill plot was linked to the exchange, as well as possible collusion between the KPC management and the office of the Commissioner of Lands.

"We suspect that by the time Kenya Pipeline was writing to surrender the plot, arrangements had already been made at the Commissioner of Lands office on who would be allocated the same plot–" said the CID source.

Revelations about the suspicious Kenya Pipeline land deal comes barely two weeks after a former cabinet minister Mr William Ruto was arrested and charged with fraudulently obtaining Sh77 million from the same parastatal for land which was still a Government forest. Mr Ruto was charged together with the former Commissioner of Lands Mr Sammy Mwaita. 

The land deals over which Mr Ruto and Mr Mwaita were charged in court took place when Dr Cheruiyot was managing director of Kenya Pipeline. Dr Cheruiyot was appointed MD in April 2001 replacing the then long serving Mr Ezekiel Komen.

The source also said that there were other fresh matters relating to KPC dealings that they were investigating. These include tens of millions of shillings paid to various companies by the KPC while there is no evidence of any services or work having been done to justify the hefty payments.

In one such instance, Dr Cheruiyot authorised payments of Sh20.4 million to Aventura Trading Company, a firm closely associated with a former Kanu operative.

Available documents give a detailed chronology of how the deal was conceived. It started with a report which claimed that a section of the oil pipeline passing through Mukuru slums in Nairobi was in danger of being washed away by floods. 

The report further claimed that huge heaps of garbage had formed along the pipeline "spewing cascades that have seriously eroded the right of way."

The report suggested that there was an urgent need to clear the garbage and reconstruct the eroded sections where the pipeline passed. The report further suggested that the contract for this work be given to Aventura Trading Company on "account of their quotation being the lowest and completion time being the shortest".

Aventura Trading Company was not only awarded the Sh20 million contract, but paid in full even before commencing the work. The first cheque (No. 223040) for Sh11.9 million was issued in June 2002. Two weeks later the company was writing to the Kenya Pipeline MD requesting further payments "in order to enable us to mobilise adequately at the shortest time possible". A cheque for Sh8.1 million followed soon thereafter.

The company, however, never did the work despite having been paid in full. Now Kenya Pipeline wants the matter not only investigated by CID but also is keen to recover the money paid for work not done.

Significantly, the "dangerously eroded" ground around the pipeline in Mukuru slums area that was reportedly about to give way any time according to the April 2002 report is still yet to cave in although no work was done despite the emergency nature of the contract awarded to Aventura.

A month earlier, the same company had been awarded a Sh41 million contract to provide security fencing around Kenya Pipeline’s Embakasi staff housing complex. The company was immediately paid Sh16.6 million as 40 per cent mobilisation fee. 

These are some of the deals revolving around the Kenya Pipeline Company that CID officers are actively investigating. 

It is under these circumstances that Dr Cheruiyot’s failure to appear in court over the Sh339 million case that sent alarm bells ringing. 

Last month, Nairobi Chief Magistrate Mr Aggrey Muchelule ordered the arrest of Dr Cheruiyot when he failed to appear in court.

Dr Cheruiyot’s lawyers T.K Ruto and Manjit Billing, told Mr Muchelule that their client was in the US where his wife Helen Cheptoo is scheduled to undergo surgery on May 15. 

But the chief magistrate was not impressed by the plea and told the lawyers to "tell your client that things are elephant here".

On the day he ordered the former MD’s arrest, Mr Muchelule had also summoned to court Dr Cheruiyot's surety to explain his whereabouts.