KPC bosses uneasy as anti-graft agency investigates six cases

State-owned Kenya Pipeline Company (KPC) has been caught up in a chain of corruption controversies even as President Uhuru Kenyatta moved to draw the line on corruption.

KPC Managing Director Charles Tanui is among senior civil servants in the list of the 175 the President asked to step aside pending investigations. Tanui is named among six other civil servants/parastatal chiefs who include Dr Silas Simiyu (Geothermal Development Company), Teko Lopoyetum (Water), Patrick Omutia (mining), Marriane Kittany (Chief of Staff in the Deputy President’s Office), Esther Koimett (investment secretary), Lucy Mbugua (Kenya Airports Authority MD) and Richard Langat (Managing Trustee NSSF).

Saturday, State House spokesperson Manoah Esipisu said the President had instructed the respective State Corporation boards to urgently convene Special Board Meetings, to appoint acting officers for all named chief executives and other officers.

The Ethics and Anti-Corruption Commission (EACC) is investigating six matters facing KPC. The issues being investigated are an inquiry into alleged corrupt intent in the procurement of Biometric Medical System whose value is yet to be determined and allegations against eight clearing agencies that falsified documents to claim reimbursements and commissions of Sh242.7 million.

Others include an inquiry into allegations of procurement irregularities in the KPC award of tenders to Petro City, Redline Company and Lelan Koech and Company Advocates valued at Sh5 billion and irregular debt refinancing of Sh2 billion by Triple A to KPC management that caused the parastatal to incur losses of about Sh286 million.

Two acres of land

Also under investigation is an allegation that KPC irregularly formed a joint venture with M/s Gas Company (GCL) which caused KPC to incur a loss of Sh130 million and a parcel of land acquired in 2007 at an inflated cost of Sh600 million.

The body is also on the stop over the purchase of a two-acre parcel of land neighboring its headquarters in Industrial Area at a cost of Sh545 million and another parcel on the process of buying in Kajiado.

However, Tanui has said most of the issues under investigations took place when he was not the MD. “The issues being investigated by EACC took place before I became MD. I have handled the required documents for matters raised during my reign and most of them have been cleared,” he said.

KPC is accused of being in the process of buying the two acres of land at a price Sh200 million above the value of the land. Top sources within the line ministry indicate the estimated value of the property ranged from Sh250m to Sh300 million.

“The truth is that issues were raised during the purchase of the land. EACC stopped the process for several months. They investigated and after establishing that there was no wrong doing they gave us a go ahead to proceed with the acquisition,” said Tanui.

The point of contention is how KPC arrived at a price of Sh545 million for the parcel of land yet the Chief Government Valuer was not consulted and neither did he give a valuation report as required. “After investigating the acquisition, EACC recommended that we get a valuation report from the National Land Commission for the property. That is what we did before continuing with the negotiations. We are yet to pay for the land,” Tanui explained. The law provides that any land that the government wishes to buy or sell must be valued by the Chief Government Valuer.

Erroneously awarded

Ministry officials are also said to have raised questions when KPC initiated a process of buying 100 acres in Kajiado. Tanui first wrote to the Ministry seeking permission to buy 100 acres of land in Kajiado at a cost of Sh4.1 million per acre for the construction of an LPG facility. Nonetheless, the ministry declined the request on the basis that the LPG sector was not the core business of KPC.

The Chief Government Valuer also issued an evaluation report that put the price of an acre of land of the said property at Sh1.1 million. However, the Parastatal is said to have gone ahead to initiate purchase of the parcel of land. The process only stopped after the Ministry ordered the body to concentrate on its core functions and when natural gas deposits were discovered in northern Kenya.

Equally controversial is circumstances around KPC when it issued a contract worth Sh9 million for the supply of self-priming diesel driven portable pumps then proceeded to cancel it and issued the same to another company 20 days later on the ground that the contract had been erroneously awarded.

This happened amid allegations of interference from senior ministerial officials who allegedly demanded that the contract be issued to another bidder. The award letter is dated February, 2 2015 while the cancellation letter is dated February 23, this year.