Top auditor went on shopping spree after looting Sh27m

Director of Public Prosecutions (DPP) Keriako Tobiko recommended prosecution of Stephen Kinuthia over  alleged plunder and abuse of office. (Photo: Fidelis Kabunyi/Standard)

A deputy Auditor General bought a car for his daughter, invested millions through a prominent investment bank and brought parcels of land using proceeds of the Sh100 million audit vault scam monies, it has emerged.

A dossier by Director of Public Prosecutions (DPP) Keriako Tobiko obtained by The Standard on Sunday describes Deputy Auditor General Stephen Kinuthia as the “prime mover” of the Sh100 million scam at the Office of the Auditor General (OAG).

Tobiko’s 21-page dossier addressed to the Ethics and Anti-Corruption Commission (EACC) declares Auditor General Edward Ouko a victim of a deception ring involving Kinuthia and a web of OAG staff and officials of companies involved in the supply of the software.

Concocted charges

Accordingly, Tobiko whittled down EACC’s three charges against Ouko to zero, describing the first unsustainable, second concocted and the third plainly illogical. In contrast, however, the DPP doubled the charges against Kinuthia and spread the counts.

“Stephen Kinuthia was the prime mover of this transaction which culminated in the procurement of the vault. Stephen Kinuthia is the one who approached OSI Slovenia and subsequently OSI Kenya disclosing to them the need for OAG to make a proposal to supply the audit software to Kenya National Audit Office (Kenao),” the DPP letter says.

A DPP money-trail of the proceeds of the tender has called the bluff of EACC’s findings on the money he allegedly received and multiplied it 62 times.

“Stephen Kinuthia received a total of Sh27,957,966 and not Sh446,000 as stated in the proposed counts. The team therefore recommends that Kinuthia be charged in relation to Sh27,957,966 as opposed to Sh446,000 as recommended by EACC,” the DPP report says.

On receiving the Sh100,675,680 for the vault, OSI Kenya moved the money to four different entities who then moved some of it back to Kinuthia. The first amount, USD361,300.25 (Sh37.3 million) went to Westcorn Africa UK Ltd for “oracle related costs”, USD20,000 (Sh2.07 million) to MihaCesta Na Svetje for “travel costs”, USD 10,682.75 (Sh1.1 million) to Valuateq Trading Co. for “consultation services” and Sh36,089,966 to Mars Ltd/Njuguna & Co. Advocates for “consultancy.”

On receiving the Sh36 million on December 22, 2013 for Mars, Njuguna & Co Advocates paid out the money to five different entities: Sh7.9 million was paid to Gachoka Advocates for paying a Charles Mwaduna of OSI Kenya - the company which had paid out the money in the first place; Sh232,000 was paid to Njuguna & Company as “fees” and Sh16.2 million was retained for Kinuthia for no known or identified purpose.

The fourth payment of Sh1.7 million was made to Car Master for purpose of buying a car for Kinuthia’s daughter, while the last payment of Sh10 million was paid to Faida Investment for purposes of investing for Kinuthia and Nanazi Ltd, the DPP says.

The web of payments did not end there. According to the DPP report to EACC, the Sh16.2 million retained for Kinuthia was further split in four batches: Kinuthia got Sh1 million paid in cash and another Sh446,000 in cheque while Sh500,000 was paid out in cheque to Charles Gichobi, an Oracle Sales executive. The last payment of Sh14.3 million was paid out to David Chege for purchase of three parcels of land in Murang’a.

From all that amount, EACC had only captured the Sh446,000 paid to Kinuthia in a single cheque from OSI Kenya Ltd through the law firm of Njuguna & Partners Advocates. For that, EACC proposed two charges of dealing with suspect property and acquisition of proceeds of crime.

In the EACC file, the only other entities charged of monies split from the main transaction was Gichobi (for receiving the Sh500,000) and Mwaduna (for acquiring the Sh7.9 million). A blanket charge of conspiracy to commit economic crime involving the sum of Sh100 million was proffered on all players including Kinuthia.

The DPP retained most of the EACC charges, added the amounts involved and roped in all the companies mentioned in the suspect transactions (OSI, Mars, Finsoft TCS, Enkei Holdings, Nanazi and Kenya Milk Farmers Investment) and their directors for money laundering.

The six charges added onto Kinuthia by the DPP after perusing the EACC file are; deceiving principal, conflict of interest, engaging in corrupt practice, collusion, corruptly giving benefit and money laundering.

Exclusive supplier

If the DPP’s findings are anything to go by, Kinuthia appears to have earned his money. From the DPP’s document, the man pulled all stops to move the deal.

On the deception, the DPP says that Kinuthia deceived Ouko several times so that he could obtain approval for the Sh100 million tender. On conflict of interest, Kinuthia was found by the DPP to have had a private interest in the procurement in question.

On collusion, he was said to have colluded with OSI Kenya Ltd, Mars Ltd and an Oracle sales executive to submit a proposal for the supply of the audit vault. The DPP says he approached Gichobi for information on audit vault and arranged for him to make a presentation to OAG.

He introduced the proposal from OSI as the exclusive supplier of Oracle software, sent the proposal to the chair of the tender committee and deceived Ouko by seeking authority to prepare an LPO for OSI when he had actually prepared one and send it to OSI 12 days earlier.

He negotiated on behalf of OAG and agreed on the price cost of the tender, directed the preparation of contract according to the proposal OSI gave, gave secret advice to OSI and Oracle and never disclosed the conflict of interest.

Kinuthia and all the others mentioned in the report are presumed innocent until proven guilty.