Fraud threat to Sh15b roads plan

(sent by John Maina)

By Washington Gikunji / EA Standard

Rival road-builders working together are trying to cheat the Government out of billions of shillings, the World Bank has found.

However, State officials raised no objections to bids that were significantly higher than expected and were on the verge of awarding the contracts.

Ministry of Finance officials and bank representatives are now in discussions about questionable bidding on Northern Corridor projects. This follows a review of five contracts valued at $218 million (Sh15.3 billion) that found "indicators of fraud and collusion" in procurement for four of them.

The detailed review was carried out last year at the request of World Bank Country Director, Mr Colin Bruce. He and his team had concerns that certain bids were 25 to 90 per cent higher than engineers’ estimates.

According to confidential documents sent by Bruce to Treasury Permanent Secretary, Mr Joseph Kinyua, the irregularities were found before any major payments had been made.

Review found indicators of collusive behaviour

The Northern Corridor Transport Improvement Project is a multi-million-dollar plan to improve the road network linking Rwanda, Burundi, Uganda and the Democratic Republic of Congo to Mombasa.

The corridor also serves Northern Tanzania, Southern Sudan and Ethiopia. In Kenya, the project will see work done on Mombasa road, the section between Lanet and Timboroa, and a 237km stretch from Mau Summit to Kisumu among others.

Although approved in June 2004, the project began operations recently and only a limited number of contracts have been awarded. The project has a total of 13 contracts.

Documents in our possession say the World Bank selected five of these contracts for review by its Department of Institutional Integrity. They include four "large civil works procurements" and one contract for the supply of fire engines to the Kenya Airports Authority.

"Based on a price analysis and unit cost comparison... the review found indicators of collusive behaviour," the report says. Companies bidding for the projects acted together to quote inflated prices to the advantage of other lower-bidding companies.

"The (review) identified actual findings of fraud by two companies that submitted protective bids in order to permit other companies to win contracts. "It also found critical indicators of irregularities in four of the five contracts reviewed."

Project is jointly funded

The review’s findings were first presented to the Government in September last year. Kinyua then wrote to the World Bank saying the recommendations would be implemented.

He, however, raised concerns about the method used and the presentation of the findings. A revised report was delivered to him in mid-January.

The Northern Corridor project is jointly funded by respective governments and development partners like the World Bank and the European Union.

It is being implemented by the Roads and Public Works ministry, Kenya Airports Authority, Kenya Civil Aviation Authority and the Transport ministry. Apart from improving the road network, it will also upgrade aviation and social facilities to help boost trade and regional integration.

Other aspects include the establishment of a National Highway Authority and a design engineering study of the Kibwezi-Kitui-Mwingi-MauaIsiolo corridor.

Although the projects are supposed to be completed by the end of 2009, the report notes that operations started only recently.

"Only a limited number of contracts had been awarded and few payments executed at the time of the review in May last year," the report. "These payments were for the purchase of vehicles and supervision consultants."