Details have emerged of how a mega-scam that would have cost the Central Bank of Kenya ( CBK) Sh320 million was nipped in the bud.
Investigations show officials of the country’s financial services watchdog conspired to defraud it in a tendering process worth in excess of Sh1 billion.
The scandal, which effectively puts CBK’s procurement procedures into question, involved use of fake documents and open disregard of directives from Public Procurement Oversight Authority.
The genesis of the well-orchestrated plot emanated from CBK’s expression to purchase, install and commission an Integrated Security Management (ISM) system that was to cost the bank at least Sh1 billion.
An ISM system is state-of-the-art and includes physical systems, access control, key management, biometric, fire control and tracking systems, among others.
The bank’s tender committee not only repeatedly lied to the Public Procurement Administrative Review Board; it also introduced illegal technicalities and even dismissed recommendations of the tender evaluation committee at least twice.
Enforced Compliance
In fact, in its ruling dated last November 29, Public Procurement Administrative Review Board observed that, “the board holds that the procurement entity (CBK) and specifically the tender committee is behaving like an unruly horse and it has to be tamed and calmed. A procurement entity that attempts to run away from the parameters set by the Act and the Regulations must be contained and forced to comply with the Act and the Regulations”
Sometime in May last year, CBK advertised a tender for supply, installation and commissioning of an ISM system, closed and opened on July 3.
Six bidders — AUA Industria, Orad Ltd, Indra Ltd, Azicon Kenya Ltd, Horsebridge Network Systems E.A. Ltd and Engineering Systems Solutions responded by submitting their tenders.
However, only three bidders — Orad, Azicon and Horsebridge — were determined to be responsive.
But only Horsebridge, a British company, and Orad, of Israel, met the technical evaluation and proceeded to the financial evaluation.
Horsebridge, however, won after scoring 93.5 per cent on technical and financial evaluation against Orad’s 84.5. The evaluation team recommended Horsebridge be awarded the contract, having quoted Sh1.2 billion for the entire works, Sh326 million less than Orad’s Sh1.56 billion.
However, the tender committee — according to documents seen by The Standard on Sunday and the ruling of the Public Procurement Administrative Review Board — at its sitting No. 140 on August 23, declined to award the tender as recommended.
Consequently, the tender committee demanded two companies that had flopped the technical evaluation, Indra and Engineering Systems, be re-introduced and the technical evaluation be done afresh.
Second Evaluation
During the second evaluation, only the original two companies — Orad and Horsebridge — qualified and the latter was found, for the second time, to be the best and was recommended for award of the tender.
Interestingly, the tender committee — at its 143rd meeting on September 26, 2012 — on learning that Horsebridge had won the tender resolved to terminate and restart the whole project.
Credible sources told The Standard On Sunday that Horsebridge had declined to cave in to demands by some members of the tender committee to inflate the project cost to Sh1.4 billion — the figure budgeted for the project by the CBK — for their benefit.
The CBK Board had approved the project because of its urgency following a security assessment.
In it’s ruling, the Procurement Board held that the purported minutes of the tender committee meeting of September 26 were “suspicious and could indeed be fake or an instrument made to subvert the course of justice.”
Majority of the tender committee members were adamant the tender must be awarded to Orad, against the tender evaluation committee recommendation.
But in a more bizarre circumstance, although the meeting that resolved to terminate the tendering process was held on September 26, 2012, the minutes for that meeting were only signed on October 12, almost a month later.
Tender Terminated
Similarly, although the law required the CBK to communicate cancellation of the process to the tenderers, it did not do so until November 29, 2012.
It is against this background that Horsebridge went to the Public Procurement Administrative and Review Board for redress.
When the CBK and Horsebridge appeared before the board, the bank strangely did not provide minutes that terminated the contract.
Interestingly, whereas Mr Carsian Nyanjwa, the secretary to the tender committee, conceded the said minutes of September 26 ought to have been presented to the board, the CBK advocate insisted he wasn’t aware of any such minutes.
However, the CBK tender committee would later deny before the same board that the tendering process had been terminated.
In its earlier ruling, the board had directed that CBKproceeds to award the contract as advised by the evaluation committee, but the tender committee did not comply.
The Standard On Sunday is also in possession of a letter addressed to CBK Governor Prof Njuguna Ndung’u by the Ethics and Anti-Corruption Commission, seeking specific details on the tender following complaints.
Although the Public Procurement Administrative Review Board overruled the CBK tender committee and directed the tender be awarded as recommended by the evaluation committee, EACC letters show the bank was in the process of awarding the contract to a different bidder.
The EACC letter further indicates the bank did not comply with a legal opinion to appeal the board’s decisions.
By MWANIKI MUNUHE, The Standard
