E-Clips:- Business Pictorial - Sh90m Paid Back In Passports Deal

The Sh90 million paid to Anglo Leasing and Finance of Switzerland as commitment fees for the controversial Sh2.7 billion passport project has been refunded the Government.

Government sources told the Sunday Nation that the money was wired to the Central Bank of Kenya yesterday.

Before the news of the payment came through , doubts about the existence of the firm and ability to return the money had been raised by a senior government source.

Contacted for comment, Finance Minister David Mwiraria, who is attending a consensus meeting on the draft constitution in Mombasa, said he did not have the information.

However, his Justice and Constitutional Affairs counterpart, Mr Kiraitu Murungi, told the Sunday Nation that the only person who could comment authoritatively on the matter was Mr John Githongo, the Permanent Secretary for Ethics and Governance, whose docket includes the anti-corruption campaign.

Mr Githongo could not be reached for comment. However, a senior government official had wondered how Anglo Leasing Finance Ltd, which he said was "to all intents and purposes a ghost firm", could purport to pay back Sh91 million.

He said: "I have also heard the rumours and if it is true, it would be delightful. However, just who exactly is paying the money?" It was bizarre, he said, that the Government had entered into a contract with "a company that we now cannot find and people who are not there."

Yesterday, new evidence emerged that Finance minister Mwiraria actually authorised the ministry of Home Affairs to procure the project through single-sourcing.

Mr Mwiraria approval was communicated in a letter to suspended Home Affairs Permanent Secretary S.M. Mwaliko. It was signed by financial secretary Joseph Oyula.

Dated November 25, 2003, it informed Mr Mwaliko that the minister had acceded to his request for "direct procurement" – a system which allows the government to buy without having to go through competitive bidding.

The letter also gave the Ministry of Home Affairs the green light to process the commitment fees. The new revelation points to the possibility of culpability in the scandal going beyond the civil servants.

On Saturday, it was revealed that Mr Mwiraria had given a written "special authorisation" to Treasury Permanent Secretary Joseph Magari to sign the agreement with Anglo Leasing and Finance Ltd.

Although the findings of the investigations by the government have yet to be made public, what is going to be difficult to defend is the blatant way in which procurement regulations were circumvented. In the first place, there was no competitive bidding for the contractor.

Indeed, Vice-President Moody Awori told Parliament that both FCOC of France and Anglo-Leasing Finance were procured through "scouting". Procurement regulations do not allow one to commit the government to such a huge project through "scouting".

In his statement, Awori defended the manner in which the contract was procured, pointing out that-under procurement laws and regulations- entities are allowed to procure through "direct procurement" and without having to resort to competitive bidding.

What the vice president ignored, however, is that procurement laws only allow "direct procurement" under specific circumstances. The law that governs public procurement - the Exchequer and Audit(Public Procurement), Regulations of the year 2001- gives specific circumstances for direct procurement.

For instance, for a procurement to qualify for direct procurement, you have to demonstrate that the "works and services can be supplied only by one candidate". The second condition is that you can only take this option in times of national emergency or disaster.

Clearly, those who approved the project will be hard put to prove that FCOC and Anglo Leasing are the only companies in the World with the capacity to implement a computerised passport issuance and border control system Neither can the project be defended on the grounds of a national emergency or disaster.

The regulations say that you can only resort to "direct procurement" for a project with a contract sum of no more more than Sh200,000. It is also noteworthy that even as far back as the year 2000, and when the immigration department was still under the Office of the President, the passport project was branded as a "security" project.

Yet the authorities at that time still settled for the "restricted tendering" method which allowed them to invite five firms to compete for the job. Indeed, when the tender for passports was floated for the second time in October 2002, the immigration department still invited three firms to compete.

Investigators will also be interested on the financing method which was adopted. How did the government come around to settling on Anglo Leasing and Finance Ltd? What are the credentials of this company and what terms did they offer for the loan?