Kituyi summoned over Sh12m tender that cost State Sh285m

A parliamentary committee plans to summon former Trade and Industry minister Mukhisa Kituyi over a tender it claims he irregularly approved, in which the government has already paid Sh285 million for a contract that was to cost only Sh12 million, and even more is being demanded.

Dr Kituyi is the current secretary-general of the United Nations Conference on Trade and Development (UNCTAD).

Documents presented to the Public Accounts Committee (PAC) of the National Assembly shows that Tele-News Africa and Atlantic Region was contracted in 2004 for Sh12 million by the Ministry of Trade to undertake consultancy services in advertising and promotion of business opportunities in Kenya on behalf of the government.

SH285 MILLION

Although the contract ended on June 9, 2004, with the firm having been paid for the two phases it was contracted for, it continued advertising and Sh285 million has been paid out, with about Sh70 million pending. Tele-News insists it deserves to be paid Sh352.7 million.

PAC chairman Opiyo Wandayi (Ugunja) said the committee is expecting to have a session with Dr Kituyi over the role he played in the deal as captured by the report from the Auditor-General.

“All the characters involved … including the former minister, now the UNCTAD boss, must appear before this committee to explain why criminal culpability should not be imposed on them,” Mr Wandayi said.

The State Department of Trade was later transferred to the Ministry of Tourism, which has been paying the claims.

Tourism Principal Secretary Safina Kwekwe Tsungu told the committee that Dr Kituyi was the minister at the time and that he wrote a letter allowing the company to participate in the third phase of the programme without a valid contract and a budget.

CONTRACTS
“We registered our concerns with the Office of the Attorney-General but what we were told is to go and pay. We are equally disturbed because it is painting us in bad light,” Ms Kwekwe told lawmakers last week.

The Public Finance Management Act bars government entities from entering into contracts without a budget. Ms Kwekwe notes that in August 2011, the Attorney-General advised the Ministry of Trade and Industry to pay the contractual amount but negotiate the interest payable even though there was no formal contract for phase three.

But the ministry failed to accede to the advice, prompting the company to seek court redress for the non-payment.

By the judgment of July 24, 2012, the court ruled in the firm’s favour as the firm was awarded Sh110.06 million, comprising the initial Sh12 million plus 26 per cent interest backdated to April 2004.

Part of the payment of the court award of Sh65 million was made in July 2013 as interest continued to accumulate.

OUTSTANDING BILL

Interestingly, the ministry did not contest the ruling, prompting the watchdog committee members Mr Wandayi, Dr Otiende Amolo (Rarieda), Dr Eseli Simiyu (Tongaren), Kimani Kuria (Molo), Patrick Makau (Mavoko) and Mr Qalicha Wario (Moyale) to question the sincerity of the ministry in the scandal they described as Anglo Leasing-like.

As of December 2016, the outstanding bill had accumulated to Sh210 million.

This came as it emerged that there was lack of diligence on the side of the ministry’s officials in allowing the company to continue offering the services without a valid contract.

The document from the PS also notes that there was negligence on the part of the officials in not adhering to the professional advice by the Attorney-General to pay the outstanding amount and negotiate the interest payable in 2011.

The Office of the Auditor-General, in its 2017/18 financial year report on the accounts of the ministry of Trade, notes that had the Attorney-General’s advice been followed, it could have saved the government at least Sh198 million in accumulated interest.

“This is a very grave matter. From a bill that was to cost the government Sh12 million, the public has already paid Sh285 million and counting. All those involved must appear before this committee to explain how the government lost this much,” Mr Wandayi says.

INTEREST

Mr Wandayi questioned why the ministry did not stop this, noting that in essence, the government has been paying interest above interest, which borders on fraud.

“In 2004 there was no interest of such magnitude. The money has grown exponentially,” Mr Wandayi added, with Dr Eseli noting that the interest awarded by the judge was even beyond what shylocks charge.

The fact that the government has gone on to pay more for what it contracted to pay is outrageous, Dr Amollo said.
He also noted that paying an entity for the work it has not been contracted to do is an impropriety that must be shouldered by those responsible.

“It is an act of impropriety because you are paying for a project that did not have a valid contract. It is hard to believe that this matter has been in the pending bills committee for more than 10 years. We need to find out whether it was properly paid,” he said.

But even as this happens, there is a risk of further loss of public funds through continued accumulated interest and penalties.