Will government seal public procurement loophole used to siphon billions of shillings?

 

Changamwe residents during a protest against National Land Commission compensation packages for their eviction to pave way for construction of the standard gauge railway. A recent report showed compensation was irregular leading to the loss of hundreds of millions in taxpayers’ money. PHOTO | WACHIRA MWANGI 

By DAVID HERBLING and GIDEON KIARIE

Posted  Sunday, January 3  2016 at  19:25

In Summary

• Cartels are dictating the process making Kenyans pay dearly for services and goods whose prices are inflated and awarding contracts to undeserving firms.

A study by the Public Procurement Oversight Authority (PPOA) shows that Kenya’s State agencies buy goods at an average of 60 per cent above the prevailing market price – making them avenues for corruption.

Public procurement in Kenya is not competitive – it is controlled by powerful cartels who dictate prices at which government buys goods and services.

President Uhuru Kenyatta admitted to the existence of powerful cartels in government that are helping shadowy investors to clinch State tenders.

Unexplained delays, favouritism, exaggerated price projections, splitting of contracts for similar goods and works are some of the most common indicators of graft in procurement, according to the PPOA.

Transparency International last year ranked Kenya as the 29th most corrupt country in the world.

Audit firm Ernst and Young listed Kenya’s private sector among the world’s most corrupt after a survey revealed that one in every three Kenyan companies had paid bribes to win contracts.

Corruption has been particularly rife in the public sector, where its impact has condemned the majority of Kenyans to poor public services, slowed down economic growth and left millions unemployed and in poverty.

It is estimated that Kenya could be losing as much as Sh400 billion annually or about a fifth of the budget for the current fiscal year through wastage, pilferage and theft.

READ: Corruption, taxes cut Kenya’s competitive edge in global ranking

At least five government agencies were last year accused of purchasing items at inflated prices, lifting the lid on how corrupt officials are siphoning billions of taxpayer shillings in procurement scams.

Items and services are bought well above market prices or compensation for property made inordinately high with the taxpayer failing to realise value for money.

Among the agencies that have recently been mentioned in connection with these scandals are the Kenya Railways Corporation (KRC), the National Land Commission (NLC), the Geothermal Development Company (GDC), the National Youth Service (NYS) and the Devolution ministry.

In one such case, a church made of iron sheets (both roof and walls) in Sultan Hamud was valued at Sh10.6 million and the compensation paid out.

This is just one of hundreds of similar flawed compensations for properties acquired along the Standard Gauge Railway (SGR) line by the NLC and Kenya Railways in which taxpayers lost hundreds of millions of shillings.

“The Corporation could not have realised value for its money from such acquisitions,” a Kenya Railway internal audit report that revealed the massive irregularities noted.