E-Clips:- Business Pictorial - Revealed - Secrets Of Sh58 Billion Deals

The Government finally owned up yesterday and revealed the secrets of the 18 Anglo Leasing-type projects, which had by last June already cost taxpayers Sh17.5 billion.

But the total value of the suspect contracts was much higher: a staggering Sh56.8 billion.

Of these, projects entered into between 1997 and the December 2002 election of Narc was given by Government auditors as Sh33 billion, with the value of contracts entered into by Narc put at Sh23.8 billion. The figures were revealed to an astounded House only a day after Parliament adopted a report indicting Vice-President Moody Awori, former ministers and other top figures in the Kibaki Administration for their alleged roles in the schemes. The figures were contained in an audit report tabled by Finance minister Amos Kimunya, which detailed the deals and their current status.

Even where projects were said to be completed, the report says the value received was still questionable because the bids were uncompetitive. It provides a major indictment of the Governments record keeping, where the states own auditors were unable to trace contract documents to verify whether equipment said to have been tendered for and delivered met the specifications. In other instances, auditors were unable to determine whether contracts were concluded because they were denied access to documents detailing the agreements.

Projects said to have been completed were:

A Sh1.94 billion digital multi channel security telecommunications system for the Prisons Department, agreed in 1997 when Kanu was in power. Finance for the equipment and supply was to have been made by LBA Systems Ltd., of Stratharily, Upper Largo, of Scotland.

The purchase of four Mi17 helicopters for the police at Sh2.84 billion from Sound Day Corporation of Daventry, England, with financing from Apex Finance Corporation of Geneva, Switzerland. The supply of police vehicles from MS Leyland Export Ltd., of Lancashire, United Kingdom, financed by Silverson Establishment of Cambridge, UK. The amount paid by the Government is still unknown, but the supplier refunded Sh72.8 million.

The report says: "Because of inadequate information and records provided, there are still several outstanding audit issues which need to be explained." These include questions about whether the goods or services were actually received; how fair the prices were and terms of credit, and whether they were worth the amount paid.

Early warning

Projects not completed included:

Forensic laboratories for the Criminal Investigations Department financed by Anglo Leasing, where Sh375.3 million was said to have been refunded; A second contract for communications equipment for the Prisons Department for Sh572.8 million;

The supply of various equipment to the police for Sh2.6 billion and for which the Government paid Sh225 million in interest. The supply of other unspecified equipment to the Kenya Police at Sh1.76 billion, where the Government paid Sh161 million interest. The supply and installation of an early warning radar system for the meteorological department for Sh1.3 billion and for which the Government paid Sh171.5 million interest;

An independent data network and Internet satellite link for the Postal Corporation of Kenya (PCK) for Sh1.24 billion, where the Government had paid Sh22 million interest; Broadband communication equipment for Sh533.7 billion, with interest paid at Sh4 million;

The procurement of operational technical support and warranty services for the Mi17 helicopters for the police for Sh635.2 million with interest paid of Sh70 million. The Department of Defence project Nexus, described only as "drawing and execution of various works, delivery and installation of various security and communication equipment" for Sh1.3 billion.

Projects commissioned by Narc were given as:

The construction of a naval ship for which Sh1.2 billion was paid including interest; A multi-channel security telecommunication network for the Administration Police for Sh74.2 million;

The installation, commissioning and establishment of police security law and order system where Sh509.6 million was refunded to the Government. Implementation of the tamper-proof passport system for which Sh93 million was refunded to the Government; Another project vaguely defined only as modernisation of police equipment for Sh115.5 million;

The design, supply and installation of various security electronic systems for the National Security Intelligence Service for Sh213.6 million. The auditors recommended that professional valuation of the contracts should be carried out to determine their worth and to see if the public got value for money.

Legal action should be undertaken in cases where prices were inflated or money was paid but no goods were delivered, they said. Seven of the companies that entered into deals with the Government did not exist at the addresses they provided and the Attorney-General should start legal action against them.

The report also recommended that security related budgets should be taken to Parliament for scrutiny and the spending scrutinised by the Controller and Auditor-General. "Consideration should also be given for establishment of a special Parliamentary committee to deal with defence/national security issues, including the related accounts and audit reports. Members of such a committee would be subject to security vetting", it concluded.

A similar audit was completed last year but the Government was reluctant to make it public. This was after former British high commissioner Edward Clay raised questions about security contracts.

The report tabled by Mr Kimunya is dated April 10, 2006. It follows acceptance by MPs on Tuesday of the report by the watchdog Parliamentary Accounts Committee, which said Vice-President Awori, former ministers Kiraitu Murungi and David Mwiraria, the attorney-general, Mr Amos Wako, and Public Service head Francis Muthaura plus other leading officials in the Kibaki Government, should be investigated over their alleged roles in the Anglo Leasing-type scandals.

In accepting the committees findings, MPs also accepted that President Kibaki himself was fully aware of the affair because he was briefed by former anti-corruption czar John Githongo. MPs adopted the report immediately after Mr Awori and the former Finance minister Mr Mwiraria poked holes in the account given by Mr Githongo to the committee, saying it was one-sided and denied them a chance to put the record straight.