Queries raised on Sh32 billion fibre optic project

Workers laying fibre optic cable in Nyeri town

Workers laying fibre optic cable in Nyeri town on August 18, 2020. Auditor-General Nancy Gathungu is on the spot for failing to do a forensic audit on the procurement and operations of the Sh32 billion fibre optic project, in spite of requests from Parliament.

Photo credit: File | Nation Media Group

Auditor-General Nancy Gathungu is on the spot for failing to do a forensic audit on the procurement and operations of the Sh32 billion fibre optic project, in spite of requests from Parliament.

This came as the auditor-general flagged Sh12.54 billion in foreign borrowing from China to finance various projects, among them National Fibre Optic Backbone Infrastructure (Nofbi), under the Information Communication Technology ministry led by Cabinet Secretary Joe Mucheru.

The fibre optic project was undertaken by the State Department for ICT and Innovation to enhance the government information system, with financing through loans from the Exim Bank of China.

While adopting the 2017/18 report of the Public Accounts Committee (PAC) on the audited accounts of the national government, the National Assembly passed a resolution that the auditor-general undertakes the forensic audit on Nofbi and report to the House within three months after the adoption of the PAC report.

The 2017/18 PAC report was adopted by the National Assembly towards the end of 2020.

Waiting for audit report

However, almost two years down the line, the auditor-general is yet to present the forensic audit report to the House or explain the delays, even as PAC chaired by Ugunja MP Opiyo Wandayi, remained relentless.

“Within 30 days upon adoption of this report, the auditor-general should transmit the report on the forensic audit to the National Assembly without further delay,” reads the 2019/20 PAC report on the audited accounts of the national government.

The report was adopted by the National Assembly on June 9, 2022, the day it adjourned and proceeded on recess ahead of the August 9, 2022, General Election.

Mr Wandayi was, however, bullish that regardless the duration the forensic audit takes, the truth will have to come out one day.

“It is just a case of delayed justice. Ultimately, we will know the individuals who have been siphoning money from Kenyans,” said Mr Wandayi.

Handpicking faulted

Already, the auditor-general has faulted the ICT State Department for handpicking and awarding the contract to Huawei Technologies Company Ltd, a Chinese firm, without following the procurement process.

Details of exactly how much the Nofbi project has cost the taxpayer remain hazy, hence the forensic audit.

However, the 2017/18 audited accounts of the ICT State Department show that the first phase of the project, which was awarded to Huawei Technologies Company at Sh5 billion, was initiated in 2010 and completed in 2012, and may not have had procurement issues.

Subsequent extensions in scope and geographical coverage were automatically granted to the contractor without undertaking any procurement process in line with the Public Procurement and Asset Disposal Act of 2015.

Some of the extensions were yet to be completed and commissioned as at June 30, 2020.

No technical report

Further, the audit states that the technical report for supplies of the project to confirm adherence to the specifications was not provided and the operational acceptance certificate was signed by the project manager and an administrator whose technical capacity could not be confirmed.

Phase II of the Nofbi contract cost the government Sh7.2 billion, with its extension costing a further Sh9.8 billion, both in loans from the Exim Bank of China.

Later, loans in excess of Sh10 billion were procured towards Nofbi, but whose details the ICT state department has not made public despite numerous requests.

The loans were procured in renminbi (RMB), the official currency in China with the yuan as its base unit.

Loans not recorded

Curiously, the 2019/20 audit report notes that the loans have not been recorded in the authority’s financial statements or accounting records.

“Under the circumstances, the legality, propriety and justification of the loans could not be ascertained,” the audit report says.

Phase II was signed between the ICT ministry and Huawei on December 17, 2014 to extend the government information system from counties to citizen information centres in the 290 constituencies.

Interestingly, representatives of Huawei (Kenya), while appearing before the committee in early 2021, disclosed that they were not aware of the contract and that efforts to get the contract documents from the Office of the Attorney-General (OAG) had proved futile.

This raises serious issues that the auditor-general must deal with in the forensic audit, including whether the Chinese firm was given Phase II of the contract without any basis of discussions now that the representatives claimed not to know about it.

Siphoning public funds

Yesterday, Mr Wandayi said that Nofbi was a scheme that was well designed to enable Huawei to come on board exclusively and enable money to be drawn by people hell-bent on siphoning public funds. 

“I would like to assure that every single soul who got involved in this deal, right from Huawei and the ministry, among others, will be brought to book. Kenyans need justice,” said Mr Wandayi.

The audit report further shows that the Sh12.54 billion relates to direct payments made by a Chinese Bank to the contractor for undertaking the implementation of Konza Data Centre and Smart City Facilities Project.

The payments made consisted of Sh2.67 billion for the Data Centre at Konza Technopolis, Sh608.98 million for the Nofbi project and Sh9.26 billion for Konza Tech City Project.

The audit report notes that the payments were supported by photocopies of documents instead of original documents, which the ICT state department indicated were forwarded to the lender.