E-Clips:- Business Pictorial - Awori Response Fails To Answer All Questions

Vice-President Moody Aworis statement on the passport equipment tender raises more questions than it answers. It is short on details and pertinent issues and long on background information about issues on which there is no disagreement.

The gist of his argument is that the expansion of the project to one which was to cost billions of shillings was justified because of security and the terrorism threat. The pertinent question, however, is whether this contract was procured in a transparent manner.

As he admits in his statement, the project was procured through single-sourcing. He says that the "Government scouted" for a company and ended up awarding the contract to the French company FCOF. This statement begs several questions.

First, since when did the Government start procuring multibillion-shilling contracts through "scouting"? Who exactly did the scouting - the Treasury, Ministry of Home Affairs or an agent - and how many proposals did the "scout" bring to the table for consideration?

Mr Awori should have also explained why, in the process of "scouting", the three internationally reputed companies which had been shortlisted in the earlier tender were left out. Had the Government wanted to be transparent, they should have invited proposals from other players.

The Vice-President has attempted to justify the choice of the French firm on the grounds that it came up with an offer which included "financing". This argument does not wash. Since the contract was single-sourced, how can we know whether there were other companies with better supply and finance offers?

Whichever way you look at it, the method by which the French company was chosen was one that was wide open to manipulation and payment of kick-backs.

If anything, the Government should be wary of deals which come up with financing. In 1994, Lavalin International, who were the contractors on Eldoret Airport, almost abandoned the project when the financier - a Canadian company by the name ICF International - disappeared. Although the Government announced at that time that it had requested Interpol to trace the Canadian financier, nothing has been heard of them since.

Furthermore, the Treasury should have known that this is the type of financing arrangement which will give it problems with the IMF. International lenders loathe security contracts which are procured in such a secret manner.

Since the year 2000, Kenya has had serious problems with both the Paris Club and the IMF over commercial loans procured to fund security contracts.

In any event, Mr Awori was silent on the financing terms offered by Anglo Leasing and Finance Company. The likelihood is that we will soon be hearing stories about some nondescript European commercial banks claiming to be owed money by Kenya and holding Kenya government promissory notes purchased at heavy discounts. If Anglo Leasing is only a financier, why was it the one that was paid Sh90 millon?

Why did not the officials involved in this procurement go through the conventional route by seeking a government guarantee through Parliament? The External Loans Act is clear on how the Government can contract external loans.

As it is, the Treasury has taken huge risks by incurring an expensively procured commercial debt which will only serve to add to the countrys worsening external indebtedness.

Indeed, Mr Awori delivery was a clever scheme at spreading guilt and fudging culpability between the Treasury and the Office of the Vice-President and Ministry of Home Affairs. He was at pains to demonstrate that everything was done through consultation. Yet the evidence clearly shows the fact that the Immigration Department had opposed the project from the very beginning.

Indeed, both the tone and content of the letters by the Principal Immigration Officer, Mr H. ole Ndiema, to the Treasury in May show unequivocally that this project was imposed on Home Affairs.

In view of Mr Aworis statement, Parliament must now demand full disclosure on the project. The Treasury should be made to produce the actual contract agreement between the Government and the French Firm and to scrutinise the repayment terms.

This agreement should also be scrutinised to establish the identities of the actual signatories to the controversial contract. In response to queries by a Liverpool-based newspaper this week, Anglo Leasing stated that it was a Swiss Company and that what it has in London is but a small representative office.

Curiously, the company referred to the immigration project as "a potential contract" suggesting that it may not have a deal with Kenya yet. If that is so, why was it being paid Sh91 million?